Reports

Nov’24 Brent futures contract was volatile this morning, trading at $75.03/bbl at 07:00 BST and dipping down to a low of $74.25/bbl at 09:45 BST, before climbing up to $74.64/bbl at 11:25 BST (time of writing). In the news today, Israel has unleashed it most widespread wave of airstrikes on Lebanon, and warned citizens to evacuate areas near Hezbollah posts, according to Reuters. Israeli Defence Minister Yoav Gallant said today that the country is “deepening our attacks in Lebanon” and will continue until “we achieve our goal to return the northern residents safely to their homes”. In other news, Shell is preparing to shut in oil production at two of its platforms in the US Gulf of Mexico, Stones and Appomattox, as a tropical disturbance may cause a potential impact on their operations. Meanwhile, a port strike in the US looms on the horizon, threatening a potential supply chain crisis and increasing prices. Finally, China’s newest 400kb/d refiner Yulong has started up their crude unit and Libyan oil exports have rebounded above 700kb/d, according to Bloomberg, despite the ban on exports by Libya’s eastern government. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.77/bbl and $1.92/bbl, respectively.

Nov’24 Brent futures contract was rangebound between $74.50/bbl and $74.80/bbl throughout the morning, trading at $74.45/bbl at 11:25 BST (time of writing). In the news today, data from the General Administration of Chinese Customs stated that Chinese crude imports from Malaysia surged 31% (1.77 mb/d) y/y in August, making it China’s second-largest supplier after Russia. Furthermore, Malaysia serves as a major international terminal for crude oil shipments and has been allegedly linked to transportation of sanctioned Iranian and Venezuelan crude oil throughout Asia. In other news, after Hezbollah leader Hassan Nasrallah’s speech yesterday vowing to retaliate against the pager explosions, the conflict escalated further last night as Israeli warplanes carried out more than 52 airstrikes in southern Lebanon. In response, the Hezbollah chief stated this latest attack could be “a declaration of war”. Finally, Kazakhstan’s Karachaganak oilfield says it cut oil output from 5-9 Sep due to maintenance and is set to run another round of maintenance on 23-28 Sep. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.85/bbl and $2.06/bbl, respectively.Nov’24 Brent futures contract was rangebound between $74.50/bbl and $74.80/bbl throughout the morning, trading at $74.45/bbl at 11:25 BST (time of writing).

After the Nov’24 Brent futures contract came off yesterday evening following the Fed’s 50 bps rate cut, flat price strengthened his morning, trading at $73.94/bbl at 07:00 BST and moving up to the $74.35/bbl handle at 11:30 BST (time of writing). The Fed cut signals the start of easing and has fostered expectations of possible stronger future demand for crude oil. In the news today, Saudi Aramco has awarded a $2 billion deal to Italian engineering group Saipem as part of the expansion of the Marjan offshore field in Saudi Arabia, expected to provide a 300 kb/d boost in production capacity by 2025. In other news, analysts at Citi stated Brent crude prices in Q4 could be bolstered by demand possibly outstripping supply in the near-term and suggested that prices could have temporary support in the $70 to $75/bbl range. However, Citi remains strong in its view that Brent is set to decline to around $60/bbl in 2025. Finally, following the explosion of thousands of Hezbollah pagers in Lebanon earlier this week, other devices including radios, laptops and even solar power cells have detonated, injuring a total of 450 people and killing at least 20, according to Al Jazeera. Israel has yet to comment on the explosions meanwhile Hezbollah leader Hassan Nasrallah is due to give a televised address at 15:00 BST today. 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 $1.92/bbl, respectively.

Nov’24 Brent Futures flat price declined this morning from $73.27/bbl at 07:00 BST down to $72.65/bbl handles at 11:20 BST (time of writing). Crude prices fell alongside API estimates showing an unexpected increase of 1.96 mb in US crude oil inventories on Tuesday. This weakness came in spite of bullish factors including escalation of conflict in the Middle East and the potential for a 50-basis point Fed cut to stimulate US economic growth. In the news today, the explosive pagers used against Hezbollah in yesterday’s bombing in Lebanon were alleged to have been modified by Israel’s Mossad spy agency at the production level. A Lebanese security source told Reuters that up to 3kg of plastic explosives were hidden in the 5,000 Gold Apollo brand pagers ordered by Hezbollah. The group has communicated via Telegram today that they intend to retaliate against the Israeli attacks. In other news, US Gulf Coast oil shut-ins have dropped to 102 kb/d as output recovers after Hurricane Francine dissipated on 14 Sep. The US is also seeking to increase their SPR by 6 mb of crude amid relatively low oil prices. Finally, Russia could hold off oil export cuts in October due to domestic refineries maintenance, as per Reuters. Furthermore, Indian Oil Minister Hardeep Singh Puri has stated that India will not change its energy policy to buy oil from the cheapest supplier, indicating that India will continue to buy cheap Russian crude oil. 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 $1.61/bbl, respectively.

Nov’24 Brent Futures flat price weakened this morning from $73.13/bbl at 07:00 BST to $72.50/bbl at 11:30 BST (time of writing). After last week’s upward trend, prices are relatively steady amid US output concerns, countering bearish sentiment caused by lagging Chinese demand. In the news today, Fed funds futures show markets are now pricing in a 69% chance that the US Federal Reserve will cut rates by 50 basis points, as per data by Reuters. A lower interest rate could potentially lift oil demand by supporting economic growth. In other news, the UK government is intensifying its crackdown on the oil trading empire of Hossein Shamkhani, the son of an advisor to Ayatollah Khamenei, Supreme Leader of Iran. The UK is continuing to scrutinise the business practices of London-based Nest Wise Trading, owned by Shamkhani, and has warned Shamkhani’s company with immediate dissolution due to its role in trading both Iranian and Russian crude. This comes as part of a broader crackdown in the UK and US on entities believed to be evading oil-trading restrictions. Finally, US Secretary of State Antony Blinken is headed to Egypt today to prepare a proposal to present to Israel and Hamas for a cease-fire deal and release of hostages. Blinken, however, has no public plans to meet with Israeli Prime Minister Benjamin Netanyahu on the trip. The visit comes amid Israel threatening to escalate conflict against Hezbollah. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.57/bbl and $1.41/bbl, respectively.