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The oil market saw a full capitulation this week as Brent futures fell below $70/bbl for the first time since December 2021. Gasoil continues to struggle, while gasoline found a wind of strength off the back of Hurricane Francine. Even though trading volumes are down with key traders enjoy the APPEC festivities, the show in oil swaps must go on.
Nov’24 Brent Futures flat price initially declined this afternoon from $70.60/bbl at 12:00 BST down to a low of $69.06/bbl at 15:50 BST, testing the key psychological support level of $70/bbl again before rebounding up and touching $70.90/bbl at 17:40 BST (time of writing). The drop below $70/bbl likely triggered a sell-off as traders moved to minimize exposure to further downside risk. However, the swift recovery above $70/bbl may suggest strong buying interest at this critical level, with potential upside momentum. In the news today, EIA data for the week ending 06 Sep showed US crude inventories rose by 0.833 mb, below market expectations of a 1 mb rise, whilst US crude oil imports increased to 1.526 mb, compared to a 0.85mb draw over the previous week. According to Bloomberg, the increasing stockpile of US inventories has added to concerns about an oversupply of crude. In other news, Libya’s oil exports have plummeted to 194 kb/d, which is an 81% w/w decrease in exports, as per data by Reuters. The situation remains uncertain as the political standoff over control of the central bank continues between Libya’s rival governments. Finally, the National Hurricane Center has stated that Hurricane Francine is due to hit Louisiana this afternoon, with operations now suspended at Port Fourchon, a key energy services hub and supplier of equipment to offshore oil producers in the Gulf of Mexico. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.45/bbl and $1.12/bbl, respectively.
The November Brent Futures contract has seen a stronger morning, steadily climbing to $70.84/bbl at the time of writing (11:20 BST) following the sharp sell-off yesterday, amid expectations that Hurricane Francine may disrupt oil and gas production in the Gulf of Mexico. We noted that Brent fell yesterday amid no visible changes in fundamentals as risk aversion gripped markets; this was evidenced in gold moving higher and bond yields declining markedly. In headlines, Exxon is planning to cut production at its 523 kb/d Baton Rouge refinery to 20% ahead of Francine’s expected landfall, as reported by Reuters.
Nov’24 Brent futures flat price has plunged below $70/bbl this afternoon for the first time since December 2021, pricing at $71.20/bbl at 12:00 BST and reaching a high of $71.81/bbl at 14:30 BST, before diving down to $68.97/bbl at 17:30 BST (time of writing). The sell-off may have been exacerbated by a large number of longs stopping out, especially as prices fell below the $70/bbl psychological level. This comes amid expectations of ample supplies and demand concerns amid weak economic data out of vital economies such as China. In August, Chinese imports increased by just 0.5%, missing expectations for a 2% boost, and down from 7.2% growth a month prior. In the news today, OPEC lowered their global oil demand forecast for 2024 again from 2.11 mb/d to 2.03 mb/d. Until last month, OPEC kept the forecast unchanged since it was first made in July 2023. OPEC also cut its 2025 global demand growth estimate to 1.74 mb/d from 1.78 mb/d. Prices slid on the weakening global demand prospects and expectations of oil oversupply. Meanwhile, the EIA’s forecast for Brent crude oil prices reaching $84.44/bbl in 2024 has been lowered to $82.80/bbl. Correspondingly, their forecast for 2025 has been reduced from $85.71/bbl down to $84.09/bbl. Finally, Tropical Storm Francine continues to barrel across the Gulf of Mexico and is on track to become a hurricane this week. Still, we have yet to see any robust indication of how this hurricane could impact US oil supplies. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.42/bbl and $0.96/bbl, respectively.
The November Brent futures contract has seen a weak morning, falling from $71.70/bbl at 07:00 BST to $70.78/bbl levels at 11:20 BST (time of writing). In headlines, Exxon Mobil has withdrawn from bidding on Galp Energia’s 40% stake in Namibia’s offshore Mopane oil discovery, estimated to contain at least 10 billion barrels of oil and gas worth over $10 billion. According to Reuters, over 12 oil companies, including Shell and Petrobras, had shown interest in the stake, though reasons for Exxon’s exit are unclear. Separately, oil and gas production in the Gulf of Mexico could face disruption unless the US National Marine Fisheries Service updates its endangered species protection regulation by December 20, following a court ruling. Without an update, the regulatory process to ensure oil and gas operations are carried out following the Endangered Species Act would become more cumbersome and complicated, potentially affecting production, as highlighted by the API. The Gulf currently produces 15% of the nation’s oil and employs over 400,000 people. At the time of writing, the Nov/Dec and Nov/May’24 Brent spreads are at $0.43/bbl and $1.16/bbl, respectively.
Nov’24 Brent futures flat price was volatile this afternoon, pricing at $71.68/bbl at 12:00 BST, with a high of $72.07/bbl at 12:53 BST and low of $70.68/bbl at 12:54 BST, before climbing to $71.94/bbl at 17:45 BST (time of writing). In the news today, tropical storm Francine has formed over the Gulf of Mexico and is set to hit the upper Texas and Louisiana coasts as a hurricane later this week. In response, Shell has paused drilling operations at its Perdido and Whale offshore platforms, both in the storm’s path according to Reuters. Exxon has also temporarily halted operations at the Hoover oil platform, offshore Texas. Meanwhile, the port of Freeport in Texas has decided to remain open to seaborne commercial traffic, on the condition that vessels report their movements. In other news, the ongoing shutdown of Libyan oil exports is propping up several light crude oil grades, including WTI Midland. European imports of WTI Midland have increased 24% m/m in August, reaching 1.43 mb/d. The US crude could replace lost volumes of Libyan crude in the short term, whilst Azeri and Algerian Saharan Blend will be refiners’ top choices for Libyan substitutes for October, according to Rystad Energy. Finally, Indian demand for oil products is down in August by 2.6% y/y as heavy rainfall has dampened diesel demand (-2.4% y/y). At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.45/bbl and $1.22/bbl, respectively.
The Nov’24 Brent futures contract has been quieter this morning, trading between $71.60/bbl and $71.90/bbl, but has since inched slightly lower to $71.50/bbl at 11:30 BST (time of writing).
Nov’24 Brent futures flat price took a steep decline this afternoon, pricing around $72.70/bbl at 12:00 BST followed by a high of $73.50/bbl at 14:50 BST before plummeting to $70.82/bbl at 17:15 BST (time of writing). In the news today, Iran’s crude oil exports were reduced to around 3.3 mb/d last month in compliance with OPEC+ supply restrictions, compared to an output of 3.48 mb/d in July. The Iraqi oil ministry has said the country will maintain a reduced level of oil exports in coming months, according to Reuters. In other news, state-owned Saudi Aramco lowered the OSP of its Arab Light crude for buyers in Asia by 70 cents to $1.30/bbl, according to a price list by Bloomberg. Finally, Nigeria’s new upstream deal with Italian energy major Eni plans to boost its production output to 2 mb/d by the end of 2024, Nigeria’s Minister of State Petroleum Resources said. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.33/bbl and $0.88/bbl, respectively.
The Nov’24 Brent futures contract has been more rangebound this morning, with the crude futures flat price rising to $73.20/bbl around 09:10 BST to then decline to $72.65/bbl around 09:40 BST to finally firm up to $73/bbl as of 11:20 BST (time of writing)….
Behold a Pale Force (Majeure) in Libya which was swiftly undermined as the four bears of the low 70s arrived. ETF rolling, CTA and macro-driven selling were joined by OPEC+, hinting at delaying the gradual reintroduction of supply. This acted to undermine any demand narrative, not that the US or China had been doing much to prove the opposite. Highs of $77.50/bbl were fleeting, and Nov’24 Brent was pushed back to 73 with OPEC not really in the same position it was in ’73. The reintroduction of Libyan barrels is inevitable and likely largely priced in.
Nov’24 Brent futures flat price shot up this afternoon from $73.25/bbl at 12:00 BST to a high of $74.14/bbl around 15:45BST, followed by a sharp descent down to $72.53/bbl at 17:15 BST, before rebounding back to $73/bbl around 17:30 BST(time of writing). The sell-off in oil price comes after the US Energy Information Administration (EIA) published their weeklyreport, stating a commercial crude inventory decline of 6.9 mb for the week to August 30, which was lower than APIestimates of 7.4 mb. In other news, China’s oil demand is growing at the slowest pace in the last 15 years with a decline of-2% YTD (excluding the COVID downturn), analysts at Bernstein said today. The drop in demand refl ects a wider slowdownin the Chinese economy with a lagging industrial sector, reduced property investment and consumer spending. Lastly, theKashagan oil fi eld in Kazakhstan is scheduled to be shut down for 4 weeks in October this year for maintenance. Inresponse, Kazakhstan’s energy ministry has sent a request to shareholders in the Kashagan oilfi eld to delay maintenance,citing gas shortages. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreadsare at $0.40/bbl and $1.35/bbl, respectively.
Nov’24 Brent futures flat price spiked this morning from $72.90/bbl at 07:00 BST to the $73.20/bbl handle at 11:45 BST (time of writing). In the news today, Mark Lashier, CEO of Phillips 66, told Bloomberg that a refining capacity shortage is looming globally and could take effect as soon as next year, estimating a cut of 700,000 bpd from the market. The chief executive’s comments come after reports last month that US refiners were planning production cutbacks due to low margins. In other news, South Sudan and China National Petroleum Corp. are considering establishing a crude pipeline to boost oil exports, which is set to traverse Ethiopia and Djibouti. South Sudan’s President Salva Kiir has met with the CNPC chairman in China to discuss setting up refinery and distribution networks. Finally, weak US job openings data (JOLTS) released on Wednesday is continuing to fuel economic worries and risk aversion, with private sector jobs now lower than in early 2019. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.42/bbl and $1.47/bbl, respectively.
Polarising strength in European gasoline and naphtha continues to define lightends. Meanwhile, there has been a dramatic reversal in the North Sea market, with the physical window seeing substantial selling on 3 Sep due to a variety of players offering WTI Midland.
This afternoon, Nov’24 Brent futures flat price showed steep downward movement from $74.50/bbl at 12:00 BST down to $73.19/bbl at 17:30 BST (time of writing), spiking briefly to $74.05/bbl around 15:45 BST. In the news today, engineers at Libya’s Brega port are reported to have seen a 600,000-barrel oil tanker loading, according to Reuters. This latest development comes despite the recent blockade on Libyan oil exports authorized by the eastern government. In other news, in Colombia, protests against increases in the price of diesel are threatening fuel supplies and state oil company operations at Ecopetrol. The protestors are utilising tactics such as roadblocks and attacking the Cano Limon-Covenas and Bicentario pipelines. Lastly, Spain’s crude oil imports from Venezuela have increased greatly since 2023, with new data published by Reuters today. Spain has imported a total of 1.7 million tons between January-July 2024, compared to a total of 1.4 million tons in 2023. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.47/bbl and $1.67/bbl, respectively.
After trading around the $73/bbl level overnight, the November Brent futures flat price saw another collapse on Wednesday morning where price action fell to lows of $72.64/bbl at 09:00 BST. From 11:22 BST, prices spiked by $1 over two minutes from $73.46/bbl to $74.56/bbl as the market reacted to the headline of OPEC+ discussing potentially delaying their planned oil output hike in October. Since then, prices corrected lower to $74.11/bbl by 11:40 BST (time of writing).
