The Official Reports

Before the rally really took hold, in the Dubai window we saw a stream of “Totsa buys from”, making just a few bids early on. There were also small buyside contributions from Mecuria and Mitsui. But it was clearly the French major setting the pace again today. Unipec, Exxon, Trafi, Reliance, Koch, Vitol and PC were all offering, but even despite the pressure from all sides, Totsa’s continued thirst for Dubai grades saw premiums up again to $1.77. That’s the highest premium in 2025! (We know we’ve only had 7 sessions but let us have our fun ). Dubai partials closed the window at $77.95/bbl, the highest physical Dubai close since 11 October! Totsa were at it in October, November and December, so why stop in January? Keep milking that winning strategy like an endless cash cow!

If you want something to get your blood pressure up, look no further than the global sovereign debt market. Markets are sliding as people say ‘Who’s going to give my money back?’ and worry about major defaults. The US, UK, France, the selloff is infecting them all faster than bird flu. Governments have gorged and binged in loose fiscal frameworks like hungry children in a Grimm’s fairytale and now it’s coming back to haunt them. Rising inflation expectations and growing anxieties about fiscal irresponsibility are driving yields through the roof. The UK’s 10-year gilt yield opened at 4.92% this morning, the highest since 2008; 10-year US treasury yields are around 4.7%; French OAT yields are the highest since 2011. They’ve borrowed more than Mary Norton’s fictitious invention and now the tide is coming up to claim them. It’s going to be a bloodbath when all the chickens come home to roost…

Saudi allocations to Asia are out! No major surprises other than volumes declining but only moderately. Crude allocations to Chinese refiners fell to 43.5 mil bbls for February delivery, down from 46 mil bbls in January. That’s still far above the 36.5 mil bbls they assigned to China for December, as the Saudis fight for market share. Rongsheng retained top spot, being assigned 16 mil bbls, while Unipec got a 2.5 mil bbls bump from January to reach 10.5 mil bbls. The month’s losers were Shandong and CNOOC, which both didn’t get a drop, having received 2 mil bbls in the prior allocation. CNOOC’s had a rough couple of days, what with the US designating it a company that supports the Chinese military and slapping sanctions all over its shipping.

Certain traders make a lot of dosh from the UK power market but it’s all Paddington can do to hold onto his hat and try to hang onto his rapidly evaporating winter energy budget . We’re certainly feeling the pinch of the current cold snap seeing demand surge, coinciding with a lull in the wind slashing production from windfarms. And just yesterday Mr Milliband was gloating about wind power overtaking gas as the biggest source of electricity… “British comedic timing”, as one trader put it.

Chinese demand ahead of the New Year remains fairly strong and has been driving flat price and structure. There was only one way for Asian trading to take Brent, Dubai and anything else: up! The Asian session opened and had us firmly back in the $77 range, before it closed at $77.60/bbl. A violent spike immediately after the window saw it jump to peak at $77.88. The $78 handle is dangling, tempting flat price up, but Brent is yet to establish a beachhead on those lofty slopes. $80 could be in the cards before everybody disappears during the upcoming celebrations for the year 4723. In the Dubai market, Totsa almost seemed overwhelmed by the number of offers, scrambling to lift them all before it lost out. Exxon, PetroChina and Reliance were all raining down offers onto the trading table, while Unipec threw a few down too, as well as hitting the few bids that buyers had chance to enter. Mercuria was one of the few buyers that managed to land a couple of bids – that were set upon by a voracious Unipec. Totsa got a whacking from the Chinese state company too. Totsa was obviously the heavy lifter, bulging like a Bulgarian weightlifter under an immense load he’s holding above his head. But is it in triumph? Well, Totsa did enough for the Dubai physical premium to firm up a touch and reach $1.60!

The North Sea window was a chaotic affair. Forties, Brent and Midland were hurled across the floor. There were plenty of bids for FOB Forties – from Mercuria, Mitsui and a rare appearance from Petraco. But the Forties offers were for CIF cargoes only. Gunvor’s 19-23 Jan CIF Forties got picked up by Trafi at Dated +$1.35. Having both offered and lifted Forties yesterday, BP returned to offer Forties again today, but didn’t get any interest.
However, the British major also offered Brent for 22-24 Jan and lowered its offer to Dated +$0.20, sparking buying interest from Mercuria who bought the cargo at this level. Gunvor entered the window offering Midland and didn’t budge from its original offer of $1.60 over Dated for a 20-24 Midland. Eventually, PetroIneos scooped this up at the offered price. A messy one but that’s when it’s most fun 😊

The window saw 2025’s first convergence, on the fourth trading day of the year. No prizes for guessing who picked it up. Of course it was Totsa. And naturally it was Exxon providing. Exxon declared an Upper Zakum cargo to the thirsty French aspirateur. Totsa was happy to lift bids from any of a number of sellers. Unipec’s offers, those from Trafi or Reliance, they all got a bashing. Vitol got a smack too, as did Shell. But the number of sellers was overwhelming, as Totsa’s mighty effort failed to halt the slip in both the Dubai physical flat price and Dubai physical premium from yesterday. The buyside players were few in number, but Totsa’s aggression made up for its solitude. Only Mercuria and BP were also there, and their bids went largely unnoticed in the sea of Totsa lifting and sellers working at full speed to keep a handle on the rampaging Taureau. Despite another impressive showing from Totsa, the Dubai physical premium slipped to $1.56, 5c down on the day. Is the indefatigable monster finally flagging? Can it make it to Chinese New Year in February, when we’ll get a couple of days with no Singapore window?

Brent made a run for it! It broke through $77 briefly before 13:00 GMT and reinforced its position above the mark in mid-afternoon trading. A decline into the window saw it drop back into the $76 range, and it closed the European session at $76.63/bbl. Traders reported “quite a few buyers on Dated”, with limited sellside interest and that turned out to be the case in the physical window. One enthusiastic player on the sellside was Gunvor, who came out all guns blazing early in the window, offering Forties and Midland. BP joined in on the action too, offering a Forties of its own – this one was for 21-25 Jan. PetroIneos liked the look of that and lifted BP’s offer at Dated +$1.20 – pretty strong! China is back in the North Sea after a hiatus.

The Saudis are a merciful bunch and didn’t want to tighten the noose too much on their customers – treat them nicely and they’ll keep coming back! The Saudis recognised the high prices in Dubai and the widening premium were a function of Totsa lifting Dubai again and again in the pricing window and did not fully reflect the price upside. Rumours circulated in Asia that Totsa made $20-30 million gains from its foray where it had a 30+ million bbl swaps position with low entry levels. The Arab Light OSP for Asia (the Saudis’ biggest buyers) was raised by 60c to reach $1.50 over the average of Dubai + Oman grades. That’s not too stringent, given the Dubai physical premium’s extraordinary strength late in December, with the penultimate premium of +$2.25 and final value of +$1.95. With the combination of bigger Chinese import quotas and a relatively low Brent flat price nearing $70 in December, and the ensuing buying rush (cough cough Totsa…), Aramco evidently chose not to reflect the bubbling up premia towards the end of the month and buyers must be happy with that!

Europe slipped back below $76 in its morning trading, shedding some of the gains it made yesterday. By lunchtime, we were looking at the mid-$75 range. Then, the Americans gave Brent a leg-up and put us back onto a $76 handle before 13:45 GMT, recovering the slide to finish at $76.33/bbl. Over in the window, Gunvor was back for another round of North Sea fun, offering a Forties CIF cargo for 15-19 Jan. Its best offer was Dated +$1 but that didn’t get any attention, so withdrew. Its other Forties offer, 19-23 Jan, came to Dated +$1.40 but likewise didn’t get a nibble. BP also offered Forties CIF 18-22 Jan and withdrew it at $1.50 over Dated. The sellers have been left out in the cold for the time being.

The late session yesterday saw Brent flat price decline below $76 again, and the Asian session flirted with that level throughout, but just failed to cling on to it, eventually closing at $75.98/bbl. Having marginally come up short of the $76 handle at the close, flat price slipped deeper into $75 following the window and settled in the mid-$75 range. On a flat price basis, physical Dubai loadings in March were significantly lower yesterday than the February loading physical Dubai as it traded in the final calendar December sessions. Yesterday, Dubai partials/Brent futures were 43c, but today gained 12c to leave Dubai partials/Brent futures at 55c. Asian demand is fierce! Buy before the yuan depreciates even further. China’s demand looks like it’s mounting a recovery – the stimulus seems to be working.

At last! Salvation for Equinor! It finally shifted some Johan Sverdrup by smashing Totsa’s offer for a 13-15 Jan cargo once it reached Dated -$0.80. Equinor had gone quiet in the second half of December having failed to garner much interest in its many JS offerings. The busyness of December’s windows saw the highest volumes of crude shipped since July, at 1.99 mil b/d according to ship tracking data. Traders didn’t waste any time getting down to business in 2025, though. It wasn’t quite as chaotic as the early December windows but it wasn’t just a start-of-month standoff either. BP wanted to get in on the action too, offering both Forties and Brent. Once Gunvor had picked up the British major’s 24-28 Jan offer at $1.25 over Dated, it withdrew its own Forties offer. Gunvor seemed indecisive, offering and lifting Forties. Not long after Gunvor lifted BP’s offer, BP seemed content with its day’s labour and withdrew its Brent offer. For February loading cargoes, quality premiums were increased across grades: Oseberg was bumped 10c, Ekofisk up 15c, while Troll rose 2c.

Welcome to Volume 2 of The Officials! 2024 was a big year for us, establishing our report and adding numerous key benchmarks, even branching out into crypto and launching our own dollar index – the ODX Asia™. Expect more exciting things in 2025, including our upcoming price discovery for Dated Brent and additional commodities, to be revealed… With a New Year, do Brent futures have a new lease of life? Asia opened up and pushed us over the $75/bbl mark for the first time since 25 November. Content with a hard day’s work, Asia gradually eased off through the rest of the session, with Brent eventually closing at $74.77/bbl. However, the foray above 75 laid the foundations for Europe to fire flat price towards $75.70/bbl at around 10:00 GMT. The mid-70s are back – we just hope the hairstyles don’t come back too.

In April we were flirting with the low $90s. Then on three occasions in H2 we’ve teased the high $60s. But Brent flat price has found its comfort zone and settled into the lower half of the $70s range throughout December. It’s been a year of two halves in terms of prices, with China’s wobble and OPEC quota delays and deliberations key drivers of price moves. Geopolitical flare ups have played their role too, with major price surges in April and October highlighting that. The rate cutting cycle that has characterised global monetary policy looks set to continue into next year.

What a year it has been! We tested low 90s and we also tested high 60s. But we are closing the year definitely towards the lower end of the range still trying to secure a $75.00/bbl beachhead for Brent as we enter the New Year. The year started with some promise for producers, as the market flirted with the low 90s trying to climb into a three-digit market… but it was not to be. Even so, Dubai ended the year on a high, with Totsa engaging in a window-based version of the classic gameshow ‘Supermarket Sweep’, hoovering up all the supply it could get its mitts on. In Ancient Greece, there was the Minotaur and nowadays in the Dubai Market there is the Major Taureau . The extremely strong Dubai physical premium we’ve seen – even reaching above $2 – in the final trading week of December puts the Saudis in a bit of an OSP pickle. How will Aramco’s leadership react to the market signals it has to contend with, even if they’re distorted, and the long-term symbiotic relationship with their customers? We’ll find out soon enough…