The Official Reports

Just as we said, we are 60s people and prices are softening. Time to grow your long hair if you have any left old guys and for the young buy some flared bottoms trousers. We are almost there. Strangely, physical has been strong, and look at recent activity in Dubai and more importantly in Brent but the line of travel is weak. We saw on TV the Saudi energy minister selling the narrative of why they had to kicked the can down the road and he didn’t look happy. Who would be? As the dust swirls around OPEC’s delay, Brent flat price drifts lower, into the low to mid-$71 range. Hey, the Saudis and OPEC have got to save face. And yesterday at the superbly timed press conference, the Saudis wheeled out more propaganda to support the decision. But they’re clearly keen to pump; they’re investing in new capacity – Aramco just awarded three offshore deals worth over $500 million! For what… not to use it? Unused equipment degrades over time, and incurs maintenance costs, so why bother investing billions to boost capacity if you’re not going to pump it?

More of the same from OPEC at its meeting as it delays unwinding voluntary and collective production cuts. More dilly dallying. More procrastination. What’s new? Well, the leaks are only getting worse as member states get fed up waiting for a release of barrels and jumping the gun. Lots of up and down action ended with Brent at $72.13/bbl at the close. And one source says, it is not a million b/d excess production from the UAE, it is only 400 kb/d. Hahahah! OMG, we had to laugh. The window was another déjà vu, as Trafi and Totsa kept up their aggressive bidding, each one looking for Midland, while Equinor offered both Johan Sverdrup and Midland. In the Midland, the buyers and sellers couldn’t find a middle ground, with quite a wide spread between bids and offers. Trafi and Totsa were reluctant to raise their bids above Dated +$1.75, waiting instead for Equinor to come and meet them. The Norwegians brought down their 21-25 Dec to Dated +$2.20 (rather high in our view) but gave up there and withdrew. Their offering of 26-30 Dec Midland at $2.15 over Dated went unanswered, as did those for Oseberg and Johan Sverdrup. BP also showed up, offering an Ekofisk at Dated +$1.50, but that wasn’t picked up either. We ended up not seeing a single trade – for the first time this month!

OPEC kicks the can down the road while the market mercilessly nibbles away at its market share! They postponed the unwinding of production cuts by 3 months to April 2025, while the original production quotas have been extended until the end of 2026. Figments of feverish imagination surely. And markets were listening closely to any chatter escaping the meeting room. The market dumped $1 as soon as the meeting began! Markets reversed a little on news that the original 2 mil b/d quotas would be extended until the end of 2026, and flat price Brent recovered into the $72 range to settle near the $72.51/bbl close of the Asian session. But things are soft, the market can be steered a little bit, but at the end of the day reacts to demand and…supply! The OPEC 8 announced another meeting on 10 December, to make sure we keep thinking about them, not that it will reveal anything meaningful. The cheating is getting worse but OPEC’s secondary sources… hello. complicit media, why do you want to report low production numbers? Come on, we all can count barrels, can’t we?

This afternoon, things looked primed for round two of pre-Christmas cheer after this morning’s jumpiness. But after lunch, markets took a turn. Flat price fell from around $74, gradually declining deeper into the $73 range and finally closed at $73.34/bbl. There was a minor interruption after the EIA’s weekly data showed a 5 mil bbl draw on national crude stocks. But this did little to arrest the momentum of the afternoon’s price action. It even kept going after the window, troubling $73/bbl. A sudden dump just before 18:00 dropped prices from $73.20 to $72.46/bbl by 18:20 GMT.

The Officials is starting a new Currency Index, ODX™, designed to reflect the financial conditions for major energy
importers in Asia. Four countries are the import leaders in the region: China, India, Japan and South Korea. ODX ™ is composed of the Chinese Yuan, the Indian Rupee, the Japanese Yen and the South Korean Won on the following percentages: Yuan 50%, India 25%, Yen 12.5% and Won 12.5%. The ODX™ is an index with an inception 100 basis set on 2 January 2024. Any subsequent rise, from that date, of the value of the US dollar relative to those major Asian oil importing currencies would lead to a rise in the ODX™. This is precisely what has happened this year.

If you’re scratching your head wondering at the major flat price rally this afternoon, worry no more! The US Treasury announced the imposition of sanctions on yet more (35!) vessels and entities involved in Iran’s “illicit” oil trade, as the uber legal, no pardon for anyone US would say. These include Iran flagged ships alongside Guyana registered vessels and the Ceres I from São Tomé and Príncipé. From the mid-$72 range at lunchtime, we climbed towards the high $73/bbl level by late afternoon. There’s reason behind chaos! (OFAC sanction list: https://home.treasury.gov/news/press-releases/jy2734)

After yesterday’s selloff, Europe lurched out of bed and jumped up at 08:00 GMT. Early European trading saw Brent build back up into the mid-$72 range and Singapore closed today’s session at $72.39/bbl. It doesn’t like being so close to $70 just yet, but flat price should get used to going lower. It’s got to go that way! So, what’s up for oil prices in the remainder of 2024? Well, according to traders, prices are very well supported at the $70 level. There has been a resurgence in some macroeconomic indicators, as US importers look to get ahead of incoming protectionism under Trump. Containers delivered into Long Beach and Los Angeles jumped to near record highs in October at 950k. Looks bullish right? But the benefits of this front loading are already behind us; a cargo ship can take up to 49 days to reach the US after setting sail from China, so there’s little upside potential there. You’ve got to get ahead of the curve to avoid getting whacked with the tariff club. When Trump comes in on the 20th January, it will likely only be downhill from there, even if we think it would be political suicide to whack Canadian oil with tariffs.

Trafi had a hard time today, facing charges of some payment peccadillos in Angola. Earlier, the company had blamed a dead man, wouldn’t you? Whatever’s going on in Switzerland didn’t deter them from declaring war in the North Sea, or whatever the word should be. You have to get it out of your system somehow. Alongside the other T, Totsa, Trafi was bidding all over. Trafi and Totsa, they’re the T x 2. T-Rex 2 come in and devour Midland. We’ve never seen a North Sea window like this. We could call it a day of infamy or Cyber Monday flash sale. Read and you decide…

We are starting effective Dec 1, 2024, a listing of key cryptocurrencies, major commodities to enable you see the larger financial and industrial sectors, global financial indices and temperatures across many key locations. We are also quoting a ‘Mini Bitcoin’ ™, reflecting the value of a 100,000th part of a Bitcoin. Bitcoin and other cryptocurrencies have become of age and are starting to become part of some countries reserves. We have also heard of trading payments in Asia being settled in Bitcoin. So, Bitcoin time has arrived, and we have jumped on the bandwagon. We are quoting some key commodities: Brent, WTI, Dubai and products among others in ‘Mini Bitcoin’ or omBTC for short. At today’s launch, Brent closed at $72.51/bbl equating to omBTC 74.25/bbl. We produce two versions of The Officials, a close of Asian markets edition and one at the close of Europe. The commodities, currencies and indices reflect their respective close of Asian and European markets. The temperatures reflect noon local time at each location. We hope these innovations in benchmarking help you make better and more informed decisions. Bookkeeping for all your operations in the derivatives markets should be easier. More complete and of course accurate!
For questions and answers please call us at +447817149889 or by email to jmontepeque@onyxcapitalgroup.com, or theofficials@onyxcapitaladvisory.com

November certainly didn’t disappoint for market excitement. Across commodities, fixed income, equities… Boy, it was quite the ride. But most of that was of course a product of the Trump reelection, which reverberated throughout financial markets globally. He’s back. The Trump has staged a dramatic return and struck gold, scoring a hat trick, winning everything on the table in the 5 November election. A Republican president, majority in the Senate, and now a majority in the House of Representatives too, gives the president-elect plenty of scope to act decisively. And he hasn’t hung about, declaring his desire to boost US crude production by an aggressive 3 mil b/d and to protect American industry by imposing stringent tariffs on imports. Inflationary consequences be damned! We’ll break out the popcorn and watch it all play out. Pandering from Canada and the EU, versus fighting talk from Mexico. Which will prove the better strategy?

What a November! Where do we start with the wrap up? Trump, of course. He resoundingly and against all kinds of odds, including a sniper taking bullet shots or the (in)Justice Department taking legal shots, got back on the commanding seat. And all the legal troubles just melted away, as if by magic. What a system! And now the man is in and moving at lightning speed. He has appointed loads of cabinet members with a nearly 100 pct hit ratio on the initial rounds. He is a man in a hurry and with a mission to fulfill.

Happy Thanksgiving, by the way, to our audience across the pond. There is much to be thankful for, big and small! And also, the same wishes to everyone globally. For those less fortunate, we ask you to think how you could help and also try to lessen anyone’s pain! Back to the market, flat price Brent was taken for a ride today, at least compared to the previous few days. Europe woke up and decided they wanted to buy Brent, with front-month Brent futures trading from a low of $72.39/bbl up to $73.49/bbl just before midday. The afternoon was a touch choppier on thin liquidity, as the US were out for Thanksgiving!

Just in time and ahead of the OPEC meeting to spice things up, The Officials bring you crude export data and implied production for the UAE, Oman and Qatar. And as they say back home, Ay Dios mio, so much cheating. The amounts are not small by the UAE, but as another Middle Eastern source said, ‘everybody cheating.’ A few hundred thousand barrels here and there, including Saudi Arabia. But the glaring overproducer, to use a kind word, is the UAE. We like to tell it straight, and some of our sources and friends were chuckling as we discussed that the UAE might get permission to increase its quote by 300 kb/d. Har, har, har, went the sources, as the UAE is about 1.0 mil b/d over the stated quota. But I guess all the OPEC members like to pretend. Why is it beyond any of us? We really don’t understand. This has been going on for some years, and I also asked why is an organization like the IEA or whoever not stating the real numbers. ‘Oh, they can’t bring themselves to say, we have been wrong for years,’ said a source that should know.

EIA inventories showed a 1.844 mil bbls draw in the week ending November 22, nothing right? Compared to a year ago inventories are down a massive 21.22 mil bbls, and the tanks at Cushing are looking particularly dry… one to keep an eye on. But the market yawns. The draw in crude was seemingly driven by a drop in imports, which fell by 1.886 mil bbls. Gasoline inventories increased by 3.314 mil bbls, but on a year-on-year basis, gasoline inventories are almost 6 mil bbls lower. In fact, national gasoline stocks remain close to the bottom of their 5-year range. RBOB futures flat price fell by almost 2c/bbl immediately after the release, pretty minor really. Other than that, the market said “I don’t care.”

Ceasefire begins in Lebanon! Israel and Hezbollah agreed to a 60-day truce after mediation from the US finally saw some progress. The US is hopeful this first step will calm tensions in the Middle East and pave the way to broader de-escalation and we hope it does too. The ceasefire began at 4 am local time, and it looks like both sides are taking the agreement seriously. We’re happy So far, no violations have been noted. As part of the ceasefire deal, Israel requires Hezbollah’s fighters to move out of southern Lebanon to lands above the Litani River. We hope the ceasefire can last and the US optimism is not misplaced. Netanyahu clarified, “With the United States’ full understanding, we maintain full freedom of military action.” Hopefully, this presents an opportunity for leaders to come to their senses and stop the wasteful bloodshed.