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Naphtha Report: A Light-End to the Year…?

December 17, 2024

The naphtha complex saw a strong start of the month before the buying in the East appeared overdone, and the propane and petchem market was also more tepid, although the naphtha market in Europe outstripped propane. The market in both regions corrected and has seen stronger selling in the cracks.

The Jan’24 NWE naphtha crack saw increased selling after an early December rally, with trade houses selling 458kb on Dec 10-12 before partially buying back to a total net short position of -4.5mb on Dec 16. Majors added 160kb to their net short position, now at 537kb, while spec traders hold 89kb long since early December. The Jan/Feb’25 NWE naphtha spread peaked at $3.75/mt on Dec 10 before falling to $2.25/mt on Dec 16 amid weakening European naphtha. Trade houses flipped positions, net buying 160kb to a total of 2.892kb, while banks added 356kb on Dec 2, bringing their net position to 667kb long.

Dubai Market Report – What goes up must come down

December 17, 2024

Brent/Dubai has continued its downward grind, with the M1 contract falling to its lowest level since July. The Jan’25 contract reached lows of $0.10/bbl on 17 Dec, while the entire forward curve has shifted lower in an orderly fashion. The contango in the Brent/Dubai boxes is very orderly, without any kinks on the curve (see appendix). The medium sour crude market has continued to tighten as OPEC+ delayed their output hikes to Q2’25. Despite buying some time and supporting flat prices, our global crude balance suggests a bearish picture for 2025, with OPEC+ possibly needing to defer their output hikes further.

Dated Brent Supplementary Report – Ice Cold Buying Beginning to Thaw…?

December 17, 2024

December has continued to see strong buying in the physical windows from a range of players, with 34 convergences so far in December. The main seller so far this month has been Equinor. Totsa has been a keen buyer of WTI Midland and has bought 18 cargoes out of the total number this month. There has been heavier selling in the past few days in the financial contracts, and there has been better selling interest and better selling in the new year weeks from trade players.

Overnight & Singapore Window: Brent Corrects to $73.37/bbl Levels

December 17, 2024

The Feb Brent Futures contract has seen mixed price action this morning, rising up to $74.10/bbl at 07:00 GMT before correcting down to $73.40/bbl at the time of writing (10:50 GMT). In headlines, two Russian oil tankers ran aground in the Black Sea near the Kerch Strait, separating Russia from Crimea as reported by the country’s emergency services ministry on Sunday. The damage resulted in oil spilling into the water and prompted an investigation by Russian authorities for potential criminal negligence, with the tankers reportedly carrying around 4,300 dead weight tonnes of oil each. Oil accidents caused by negligence are relatively common in Russia; last year, a similar incident occurred in the Irkutsk region when two oil tankers collided due to a captain operating under the influence of alcohol, spilling an estimated 60 to 90 tons of fuel into the Lena River. In other news, Chevron announced today that it has signed a deal with aluminum giant Alcoa to supply 130 petajoules of natural gas over a 10-year period starting in 2028. The gas will be sourced from Chevron’s Gorgon and Wheatstone LNG projects, which together have a production capacity of 530 petajoules. According to the announcement, Alcoa plans to use the natural gas to power its alumina refineries in Western Australia. The front (Feb/Mar) and 6-month (Feb/Aug) Brent futures spreads are at $0.37/bbl and $1.59/bbl respectively.

Onyx Alpha: All About Arbs

December 17, 2024

Another week brings another selection of new trade ideas from Onyx Research, this time looking at trades in fuel oil and distillates swaps. Our weekly Onyx Alpha report presents speculative and hedging trades based on technical analysis and data-driven tradecraft methods on Onyx Commitment of Traders (COT) and Flux Financials data.

European Window: Brent Supported Above $74/bbl

December 16, 2024

The Feb’25 Brent futures flat price traded within a 60c range on Monday afternoon. Price action reached highs of $74.30/bbl at 15:30 GMT before falling to $73.74/bbl at 16:30 and climbed to $74.11/bbl by 17:30 (time of writing). In the news, the EU has adopted its 15th sanctions package against Russia, targeting 52 new vessels from Russia’s shadow fleet, increasing the total number of such listings to 79. Shell and its partners will invest $5 billion in Nigeria’s Bonga North offshore oil project, expected to produce 110kb/d by the decade’s end, with 300 million barrels of oil equivalent recoverable from the area. According to a Bloomberg article, tanker rates for Middle East-China routes (TD3C) have fallen by a third this year due to weaker Chinese crude demand, driven by an economic slowdown, fuel-switching, and OPEC+ delays in restarting idled supply, impacting supertanker operators significantly. US SPR crude inventories rose by 0.5mb w/w to 393.0mb last week. Finally, the front (Feb/Mar) and 6-month (Feb/Aug) Brent futures spreads are at $0.38/bbl and $1.69/bbl respectively.

CFTC Weekly: Gasoline over Gasoil

December 16, 2024

In the week ending 10 December, money managers saw opposing sentiment in the crude futures benchmarks, as they got longer in Brent but shorter in WTI. Overall positioning remains bearish despite the delay in the OPEC+ output hikes as traders grapple with global economic uncertainty as Trump’s restrictive trade tariffs loom large. Bullish risk was focused on US gasoline (RBOB), while purchases of short positions in ICE LS Gasoil and ULSD Heating Oil accelerated, with net positioning in the latter reaching an all-time low.

Brent Forecast: 16th December 2024

December 16, 2024

The front-month (Feb’25) Brent futures contract has seen a supportive performance in the past week, rising to highs of $74.50/bbl on 13 December – but has come off to the $74/bbl level on 16 December (time of writing). This week,

Futures Report: Crude Tidings we Bring…

December 16, 2024

Feb’25 Brent futures rose from $71.00/bbl on Dec 9 to $74.60/bbl on Dec 13, before correcting to $74.00/bbl on Dec 16. The daily upper Bollinger band acted as resistance at $74.50/bbl. Volatility slightly increased, although Bollinger bands remained narrow, while open interest dropped from 515mb to 420mb (Dec 4-12). The MACD signalled growing bullish momentum. Market support stemmed from speculation on China’s demand stimulus, despite no concrete promises and geopolitical concerns over Israel eyeing up the vulnerability of Iran’s nuclear facilities.

Overnight & Singapore Window: Brent Weakens to $73.80/bbl Levels

December 16, 2024

The Feb’25 Brent Futures contract experienced a weaker morning session, trading down from around $74.20/bbl at 07:00 GMT to $73.94/bbl at 10:35 GMT (time of writing) as traders take profit and await the Fed’s interest rate decision, with market expectations of a 25bp cut. In headlines Libya’s largest refinery, Zawiya (120 kb/d capacity), suffered fires over the weekend caused by gunfire during armed clashes, prompting the NOC to declare force majeure on Sunday. While the fires were controlled by Monday, the force majeure remains in place amid urges for the government to end clashes to prevent further damage and potential loss of life. This incident underscores ongoing risks to Libya’s oil industry, despite recent production gains, with output reaching 1.59 mb/d in October after resolving earlier political disputes and blockades. In other news, China’s refined oil consumption peaked in 2023 at 399 million metric tons (approximately 8 mb/d) and is projected to decline by 1.3% in 2024, according to CNPC’s Economics & Technology Research Institute. This decline is largely attributed to the rapid expansion of the EV sector, with forecasts suggesting that by 2035, EVs will make up half of the country’s car fleet, alongside increasing adoption of alternative fuels for trucks. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent spreads are at $0.38/bbl and $1.68/bbl, respectively.

European Window: Brent Supported at $74.40/bbl

December 13, 2024

The Feb’25 Brent futures flat price initially saw a decline this afternoon from around $74.10/bbl at 12:00 GMT to $73.60/bbl at 14:05 GMT, before recovering to $74.40/bbl at 17:50 GMT (time of writing). Bullish sentiment has persisted as Russia launched an extensive aerial attack today on Ukraine’s power grid, using 93 missiles and nearly 200 drones, as per Reuters. Ukrainian officials stated six unspecified energy facilities were damaged in the western region of Lviv, in addition to serious damage to thermal power plants, according to DTEK, Ukraine’s largest energy provider. In other news, the presidential decree banning Russian companies from selling oil and petroleum products at the price cap set by the G7 countries has been extended until the end of June 2025, according to Russian news agency Interfax. Finally, US-based Kosmos Energy said it is in early preliminary discussions to buy Tullow Oil, with a view to potentially expanding their African oil assets. Kosmos currently has oil production and exploration assets in basins offshore Ghana and Equatorial Guinea, while Tullow Oil owns offshore production platforms in Ghana, Gabon and Cote d’Ivoire. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.39/bbl and $1.67/bbl, respectively.

Fuel Oil Report – European Fuel Oil Stays Afloat

December 13, 2024

Both the eastern HSFO and VLSFO complexes have seen generally lacklustre performance in the past two weeks, with both the 380 East/West and 0.5 East/West declining to $2.25/mt and $34/mt on 12 Dec, respectively, representing fortnightly decreases of around 30% and 20%. The European HSFO and VLSFO cracks also saw weakness but managed to recover over the fortnight, while the Jan’25 Euro Hi-5 contract is currently supported at $61/mt on 13 Dec at time of writing, having rallied from $51.50/mt on 02 Dec.

Brent Forecast Review: 13th December 2024

December 13, 2024

Iran v Israel, again On Monday, we forecast that the front-month Brent futures contract would end the week between $71 and $74/bbl. As of Friday, 8:30am GMT (time of writing), the contract is trading at around $73.60/bbl, well within this

Overnight & Singapore Window: Brent Strengthens To $74.10/bbl

December 13, 2024

he Feb’25 Brent futures contract strengthened this morning from $73.45/bbl at 07:00 GMT up to $74.10/bbl around 10:50 GMT (time of writing). Crude oil prices saw support amid reports that Russia attacked Ukrainian energy facilities this morning, targeting power substations and gas infrastructure, industry sources told Reuters. In the news today, Russian forces are advancing towards the Ukrainian city of Pokrovsk, now focusing on consolidating control of the Donetsk region in eastern Ukraine where Russia occupies over 60% of the territory, as per Reuters. In other news, Canadian oil producers plan to hike output next year, with Cenovus setting a growth target of 4.4% between 805kb/d and 845kb/d, driven by the start-up of the Narrows Lake oil sands project. Suncor also aims to boost production in 2025 by 4.4% to between 810kb/d and 840kb/d. Finally, Nigeria’s Seplat Energy is set to revive hundreds of Exxon’s idle Nigerian oil wells after completing its purchase of Exxon’s onshore oil and gas assets in the West African nation, according to Bloomberg. Seplat plans to increase oil output by 200kb/d, with CEO Samson Ezugworie stating in a Thursday interview that only 200 of around 600 blocks are currently producing. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.37/bbl and $1.58/bbl, respectively.

Trader Meeting Notes: Jingle Bull Rock

December 12, 2024

With the confirmation of OPEC+ delaying their output hikes, it looks like crude flat price will cling on to 70 for a while longer. The group has certainly bought themselves some more time, but at what cost? That is not a rhetorical question. Their market share is eroding as fast as Manchester City’s form, and our global oil balance suggests that it would be wise for the group to delay the cuts until 2026. Event risk has been one of the sole bullish drivers of flat price, with the flurry of headlines coming out of both the Middle East and Eastern Europe. But for a sustained rise, global crude demand must play ball. Climate activists will rightfully point out that the world is consuming as much oil as ever, but if you followed the narratives in our market you would be forgiven to think that we have already reached peak oil and that the end is nigh. But in the near-term, OPEC+ have really tightened the market. North Sea physical differentials remain supportive, gasoline cracks are on the rise, and US crude inventories are seasonally on the low side. We expect the bears to win the war, but the bulls are winning out this battle, demonstrating some exceptional resilience.

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