Reports

Nov’24 Brent futures fl at price increased sharply this afternoon after a period of volatility, pricing at $76.80/bbl at 12:00 BSTand reaching $77.42/bbl at 17:50 BST (time of writing). In the news, Russian oil shipping costs to India are easing, attributedto build-up in Russia’s fl eet and general weakness in the freight market. For mid-September, the cost for a Russian tanker totransport 100,000 mt has dropped to $4.25-$4.5 million compared to $4.7-$4.9 million for the period July to August. In othernews, a Reuters survey showed that Saudi Arabia could reduce the price of its crude loading for Asia in October. Theirsignature crude grade, Arab Light, is expected to be priced $0.50 to $0.70/bbl lower than the September prices. The pricereduction comes as a result of weaker Dubai benchmark prices and decreasing refi nery margins across Asia. Finally, Libyahas declared force majeure on El-Feel oil fi eld, a legal clause allowing exports to be halted, amid a widening shutdown ofproduction across the country. The El-Feel fi eld in the southwest was pumping approximately 70 kb/d when in operation andthe nation’s total oil output has more than halved since last week. At the time of writing, the front month (Nov/Dec’24) andsix-month (Nov/May’25) Brent futures spreads are at $0.75/bbl and $2.38/bbl, respectively.

The Nov’24 Brent futures contract recorded a weaker afternoon ahead of Oct’24 Brent’s expiry today. The Nov’24 flat price dropped from $79/bbl at noon to $76.70/bbl at 15:00 BST. Prices found more support here and firmed up to $77.25/bbl at 17:25 BST (time of writing). OPEC+ is reportedly set to proceed with their planned increase in oil output from October, multiple sources from the producer group told Reuters. The plan includes an output boost of 180kb/d in October by eight OPEC+ members and is part of a larger plan to begin unwinding their recent layer of output cuts equalling 2.2mb/d while keeping other cuts in place until the end of 2025. In other news, a poll of 37 analysts and economists surveyed by Reuters over the past fortnight forecast that Brent futures would average $82.86/bbl in 2024 – recording a fourth cut in Reuters’ estimates (July: $83.66/bbl). In macroeconomic news, US consumer spending increased 0.5% in July’24 (prev: 0.3%) while the PCE, the Fed’s preferred measure of inflation, increased by 0.2% in July’24 (June: 0.2%), up 2.5% y/y. Finally, at the time of writing, the Nov/Dec’24 and Nov/May’25 Brent futures spreads stood at $0.80/bbl and $2.45/bbl, respectively.

Nov’24 Brent futures flat price rallied this afternoon, increasing from $77.72/bbl at 12:00 BST to a high of $79.55/bbl at 15:00 BST before coming to rest around $78.47/bbl at 17:45 BST (time of writing). In the news, Typhoon Shanshan hit Japan’s southwestern island of Kyushu, with three people reported dead and one missing, according to Bloomberg. The storm hit the city of Kagoshima at top speeds of 123mph and is heading towards the main island of Honshu, where the major port of Mizushima and multiple oil refineries are located. In other news, US Q2’24 GDP was revised up to 3% y/y, primarily driven by consumer spending. At the same time, US weekly jobless claims fell by 2,000 to 231,000 in the week ending 24 Aug against a Reuters poll forecasting 232,000 claims for this week. Lastly, Iraq plans to cut oil output to 3.85-3.9mb/d in September 2024, and cancelled a spot cargo of 1mb in August to reduce exports, a source told Reuters. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.82/bbl and $2.63/bbl respectively.

This afternoon, Nov’24 Brent futures flat price showed upward movement from $77.30/bbl at 12:00 BST to $77.90/bbl at 17:00 BST (time of writing). During this time, prices were volatile with a rally to $78.16/bbl, a marked decline to $77.36/bbl at 15:30 BST before climbing to a high of $78.49/bbl at 16:07 BST. After the release of EIA stats today at 15:30 BST, Oct WTI prices reacted positively, showing upward movement from $74.52/bbl to $75/bbl at 17:00 BST. Libyan oil output has now dropped to less than 600 kb/d after producing an average of 1.2mb for the past year, following a series of oilfield closures by the eastern government this month. According to Bloomberg, this production cut is a response to the Tripoli-based government’s attempt to replace the central bank’s leadership. With Libya exporting around 85% of its oil barrels to Europe in recent years, it is likely European refiners will turn to the U.S. and West Africa to replace the Libyan light sweet crude. In other news, the Rhine river’s falling water levels are severely restricting the cargo limits for barges heading to inland Europe, Bloomberg said. Water levels on the Rhine have dropped periodically in recent years, with the water level at Kaub expected to be as low as 108cm by Sep. 1. As a result, a barge which can normally haul as much as 2.5k mt of middle distillates is restricted to loading 1.36k mt if heading past Kaub. This could drop as low as 1.2k mt. Finally, the Nov/Dec and 6-month Nov/May Brent futures spreads are at $0.79/bbl and $2.60/bbl respectively.

The October Brent futures flat price suffered a setback on Tuesday afternoon as its sell-off accelerated following the US open. Price action fell from the $81/bbl level at 12:00 BST to lows of $79.63/bbl by 17:25 BST (time of writing). In line with this, Brent spreads weakened significantly, with Oct/Nov falling from $1.10/bbl to $0.90/bbl over the same time frame.