Government and company officials are in discussions about potential imports of gas from Azerbaijan through Russia and Ukraine to replace a transit deal that expires at the end of the year. Negotiations were continuing as of last week, Bloomberg previously reported.
The Dec’24 Brent futures contract showed choppy price action throughout this morning, trading at $70.87/bbl at 07:00 BST and rising to a high of $71.52/bbl at 09:25 BST, before falling to $71.23/bbl at 11:30 BST (time of writing). This may have been reacting to expectations of increasing output from Libya and an OPEC+ December oil output hike. In the news today, Colombia is set to announce a $40 billion investment plan to shift away from oil to “nature-based climate solutions”, the country’s environment minister, Susana Muhamad, said. In other news, China’s central bank has lowered interest rates today as more fiscal measures are expected to be announced before 1 Oct. In order to ease the property crisis, megacities Shenzhen and Shanghai are planning to lift restrictions on the number of homes that Chinese can buy, according to Reuters. Finally, crude output by Mexican state-owned Pemex fell 6% y/y in August down to 1.77mb/d, with the Olmeca refinery’s output far below targets set by their CEO Octavio Romero. At the time of writing, the front month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.33/bbl and $0.69/bbl, respectively.
The Fed has initiated the rate easing cycle, lowering its key overnight borrowing rate by 50 bps. To be sure, it was an aggressive start and underscored the Fed’s concerns surrounding employment, in contrast to its sanguine views on inflation. The dot plot points to another 50bp of cuts by year-end, 100bp in 2025, and 50Oil traders in London woke up on 26 Sep to the Dec ’24 Brent futures plummeting below $71/bbl overnight after hitting a zenith of $75/bbl on 24 Sep. Amid these sad price movements, the all-new debate gripping the oil market is whether or not OPEC+ ever decided on a $100/bbl price target for Brent. Officially, they did not.
The Dec’24 Brent futures contract began the afternoon weaker, falling to $70.40/bbl at 14:50 BST. While this level brought in support for the soon-to-be-prompt contract, which climbed to $71.60/bbl as of 17:00 BST, it ultimately softened to $71.00/bbl at 17:35 BST (time of writing).
After selling-off overnight, the Dec’24 Brent futures contract was on a steady upward trend this morning, trading at $71.30/bbl at 07:00 BST and rising to $71.76/bbl as of 11:30 BST (time of writing). In the news today, Chinese leaders at a Politburo meeting have pledged to deploy “necessary fiscal spending” to meet China’s 2024 growth target of 5%, in response to concerns about the effectiveness of the government stimulus. According to Reuters, the September meeting is not typically a forum for macroeconomic discussion, signalling growing anxiety over slowing growth in the country. In other news, a Thursday morning statement from Israeli Prime Minister Benjamin Netanyahu’s office stated that reports of a ceasefire with Hezbollah are incorrect, and refer to “an American-French proposal, to which the Prime Minister did not even respond”. In the meantime, the Prime Minister has instructed the IDF to continue fighting in full force. Finally, Saudi Arabia has scrapped its unofficial $100/bbl oil price target as it prepares to increase output, according to Financial Times. With OPEC+ planning to boost output towards the start of 2025, Saudi Arabia seeks to defend its market share by increasing production. At the time of writing, the front month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.27/bbl and $0.60/bbl, respectively.
In addition to our regular Monday CFTC COT analysis report, Onyx Insight will publish its own in-house CFTC COT forecast ahead of the official Friday report. The model forecasts changes in long and short positions using machine learning, utilising Onyx’s proprietary data.
US Mont Belvieu TET propane (LST propane) strengthened this fortnight, on a flat price basis, with the Oct’24 contract climbing from 68.25c/gal on 11 Sep to 73.50c/gal on 24 Sep
After a relatively stable morning, price action in the Nov’24 Brent futures contract saw weakness and volatility this afternoon. Initially oscillating between high $73 and $74/bbl handles from 12:00 to 17:00 BST, price action then plummeted at 17:18 BST by 58c down to $73.23/bbl at 17:25 BST (time of writing). In the news today, EIA data released at 15:30 BST today for the week ending 20 Sep showed that US crude oil inventories fell by 4.47 mb, or more than expected and about commensurate with yesterday’s API figure. The decline was greater than the draw in the previous week, when crude stocks fell by 1.6 mb. In other news, according to Reuters, economists at Standard Chartered and HSBC have doubted the efficacy of the Chinese central bank’s stimulus package, claiming that China’s new monetary policies fail to target persistently weak consumer demand. Finally, Libyan factions have reached a preliminary agreement to appoint a governor and deputy governor of the Central Bank, as per Bloomberg, potentially marking the first step towards Libyan crude oil exports increasing. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.59/bbl and $1.29/bbl, respectively.
The Nov’24 Brent futures flat price was volatile this morning, trading at $74.90/bbl at 07:00 BST and reaching a high of $75.25/bbl at 10:00 BST before falling to $74.63/bbl around 11:30 BST (time of writing). Price has fluctuated in light of changing weather conditions in the US Gulf Coast, geopolitical risk in the Middle East, and expectations of a decline in US crude oil inventories ahead of EIA data releasing today at 15:30 BST. In the news, Storm Helene could develop into a Category 3 hurricane by the end of today, according to the US National Hurricane Center. The storm is reported to be moving east with oil platforms in the Gulf of Mexico likely to avoid any damage, however, 16% of crude oil production has been suspended as a precaution, amounting to 284kb/d, as per data by Reuters. In other news, US East Coast ports, including the port of New York and New Jersey, are bracing for the potential longshoremen’s strike that could start 1 Oct. The ports have put operational plans in place to ensure cargoes are collected before the 30 Sep deadline and minimize disruption. Finally, Israeli public broadcaster Kan has reported that the Israeli army is preparing for a possible ground operation in Lebanon, with Defence Minister Yoav Gallant seen meeting soldiers training for a ground invasion scenario. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.64/bbl and $1.60/bbl, respectively.
It was a paradigm shift in the Brent/Dubai crude market as the orderly downtrend in Brent/Dubai gave way to a mighty rally on 26 August following Brent’s rally on the Libyan supply disruption news. The Sep’24 Brent/Dubai widened from $0.30/bbl to highs of $0.90/bbl. Nonetheless, the complex is entering September pricing on a strong note, with the Sep/Oct Brent/Dubai box suppressed below -$0.30/bbl. In contrast, outright prices in the deferred have returned to previous highs above $1/bbl.
After this morning’s rally on the back of substantial monetary policy easing announcements in China, the Nov’24 Brent futures contract dipped over the course of this afternoon, trading at $75.51/bbl at 12:00 BST and declining to $74.90/bbl at 17:20 BST (time of writing). Price action has been volatile amid escalation of conflict in Lebanon and another hurricane threatening the US Gulf Coast. In the news today, as the Libyan political standoff continues to stall crude oil output, Libya’s exports have crashed to 400kb/d for this month compared to 1mb/d in August, according to ship-tracking data compiled by Reuters. Analytics from Kpler showed that most of these cargoes were headed to Italy and Greece, with some travelling to China and Canada. In other news, the US State Department and Global Affairs Canada are in negotiations over the maritime boundaries of the Beaufort Sea, according to Bloomberg. Overlapping between the Yukon, Northwest Territories, and the north of Alaska, the Beaufort Sea is thought to contain a potentially oil-rich seabed and is of particular importance as China and Russia seek to explore more resources and trade routes in the Arctic. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.68/bbl and $1.82/bbl, respectively.
The Dated market has seen a supported fortnight, with the soon-to-be Bal Oct’24 DFL rallying from a small contango on 10 Sep to nearly hitting $1/bbl by 23 Sep before softening to $0.65/bbl the following day (at the time of writing)
Another week brings another selection of new trade ideas from Onyx Research, this time looking at trades in Brent/Dubai, Eastern MOPJ naphtha, and Sing 92 gasoline swaps.
Nov’24 Brent futures contract found strong support this morning, trading at $74.70/bbl at 07:00 BST and reaching $75.86/bbl at 11:20 BST (time of writing). In the news today, Iran’s President Masoud Pezeshkian declared that he does not want to enter a full-blown conflict with Israel, warning of its “irreversible” consequences. Attending the UN General Assembly in New York, Pezeshkian said “we do not wish to be the cause of instability in the Middle East”. In other news, US Gulf Coast producers including BP and Chevron have begun evacuating oil platforms on the back of tropical storm Helene, expected to progress into a major hurricane with winds of up to 155 mph by Thursday. Finally, the People’s Bank of China (PBOC) has unveiled its biggest stimulus since the COVID-19 pandemic to set the country on track towards the government’s 5% growth target for this year. This plan includes PBOC cutting banks’ reserve requirement ratio (RRR) by 50 bps and freeing up $142.21 billion for lending, as per data by Reuters. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.75/bbl and $1.95/bbl, respectively.
After sideways price action this afternoon, Nov’24 Brent futures contract gradually fell from $74.69/bbl at 12:00 BST down to $73.16/bbl at 17:25 BST (time of writing). In the news today, China’s Russian oil imports have jumped 25.6% m/m in August as Beijing took advantage of cheaper crude prices, according to data from the Chinese General Customs Administration. Meanwhile, Chinese crude imports from Iraq rose by 43.1% m/m in August and imports from Saudi Arabia fell by 17%, as per data compiled by Russian news agency Interfax. In other news, after Israel’s defence minister announced this morning that attacks against Lebanon would escalate, aerial strikes have now killed at least 182 people, making it the deadliest day in nearly a year of conflict between Hezbollah and Israel. As the conflict worsens, the potential for Iran to become more involved in backing Hezbollah has stoked concerns of Iranian oil exports being disrupted. Finally, possible strikes at the end of the month by dockworkers at US East Coast and Gulf Coast ports could cause major delays in shipments. According to an Oxford Economics report, the strike could involve up to 45,000 workers at ports that account for roughly 60% of US shipping traffic. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.69/bbl and $1.77/bbl, respectively.
