The front-month Brent crude futures contract has fallen into a lull, with prices confined to the $68-71/bbl range over the past ten days. At the time of writing on 13 Mar, the contract was trading at $70.65/bbl. Risk takers have been paring their exposure to ICE Brent, with Onyx’s CTA model showing a decline in CTA net positioning in Brent from -23k lots on 3 Mar to -44k lots on 11 Mar. Positive data, such as softer inflation readings in the US, have yet to enamour global financial markets. US Treasury yields are still elevated while risk assets such as US equities and oil remain dampened. This apathy comes from a market rife with uncertainty amid the hullabaloo surrounding US President Trump’s tariffs. President Trump has threatened to levy further tariffs on the European Union following the latter’s plan to retaliate against US tariffs on global steel and aluminium tariffs, which took effect this week. Until we receive further clarity on President Trump’s economic policies, the market may continue to be risk-off. Additionally, the world has turned to play a game of “Chinese whispers” on the geopolitical front, with the internet filled with rumours and speculation about the timeline of a peace deal between Ukraine and Russia – adding to the uncertainty. Ukraine and Russia finally provided some clarity this week, agreeing to a ceasefire proposal. Still, Russian President Putin caveated the need to address a few issues before the deal could progress. While we await further details of this proposal, any deal agreed to will likely involve the removal of sanctions on Russian energy – which would pressure down oil prices. All in all, all roads lead to weaker prices, although one must not discount lingering bullishness from possible trade-war-linked supply tightness or severe sanctions on Iranian energy.
