The Officials

After well over 2 months, Brent is back on top. Not pricewise because it is way down nearly touching the 60 handle, but back on top of Dubai. Minor victory in a really bad day for prices. The spread between Brent and Dubai finally flipped positive for the first time since December 19th, with prompt Brent futures pricing $0.18/bbl above Dubai partials. According to traders B/D started roofing last night following the announcement from OPEC, before continuing to gain aggressively through the Singapore window this morning. But traders also suggested the move was more due to Mr Taureau’s absence than the OPEC announcement, as spreads continue to sell off. Oh such big French boots to fill.

The Ides of March! Markets collapse! Or to put it more bluntly, OPEC torpedoed the market. Brent closed at $72.56/bbl. But the real action happened after the European close as Brent collapsed by over 2% to $71.20/bbl by press time after an OPEC delegate said the group will go ahead with a 138 kb/d production increase from April! This is the first increase and a prelude of the return of 2.2 mil b/d over 18 months. An executive at a trading firm saying, “Time to test 70 again”.

The Dubai physical premium rolled out of bed. From $4.20 on Friday, it dropped to $1.22 today! That’s a massive move, far bigger than the other monthly rolls we’ve seen. After the sanctions and mega squeeze, we’ve returned to a comfortable cruising altitude where we were in December.And, in the window, February’s pattern got turned on its head. In February, a well-bid window became almost run of the mill. But today, sellers were back in full force. Exxon, Trafi, Phillips, Unipec and PetroChina all featured on the sellside. But no sign of Reliance. Alongside Trafi, PetroChina was the most aggressive seller, placing plenty of offers and hitting some bids – quite a shift from their consistent presence on the buyside in February

February has been a mega month for The Officials. We launched our Dated Brent assessment and introduced The Liquidity Report. Read them and if you have any questions we are here to help you, not to charge you crazy money but to help you. February ended with a bang. Zelenskyy blew himself up in dramatic fashion in the Oval Office. Trump said he “disrespected the United States of America in its cherished Oval Office”. Zelenskyy had a veritable brain gaseous emission with some H2S added in to completely alienate the US. Now you done it! Any notion of retaining US support went up in smoke on live TV. Mr Z was really missing his common sense and the scheduled news conference was cancelled. Like Mr. T, we just want to see a peace deal.

It is all about Trump, Tariffs and Threats. And the world is on its feet if not at the man’s feet waiting for the latest edict. If you strip out all the bluster, the man is saying: we are broke, we are pulling out, grow up and take care of your own problems, we will tariff you so we can pull industry in AND… I like low oil prices. It’s been a month of trepidation and more bombastic rhetoric. IE week synthesised the market’s sense that everyone’s anxious, concerned Trump will turn up and throw another spanner in the works. Repeated calls on OPEC to lower oil prices fell on deaf ears – who believes they’ll unwind production cuts from April? We’ll take a straw poll – let us know if you’re in Team Hold Back or Team Let Loose!

Markets were falling with the mood all sappy during IE week but then Mr. T decided to spice it up but issuing another sanction, this time to Venezuela. If I’m you think there is a free market, think again. Between Mr. T threatening or missing sanctions or tariffs and OPEC desperately selling a story of demand growth and tight production trading has been reduced to guessing what the next blabber will be. We noticed this morning that Chevron disappeared from the Dubai window and soon it will have to disappear from Venezuela too as the orange storm comes to Venezuela. About a quarter of exports currently end up in the US. After weeks under review, Trump announced yesterday he will revoke the permit Biden awarded to Chevron to operate in the country in November 2022. From bringing in upwards of 600 kb/d in 2018 and January 2019, US imports of Venezuelan crude collapsed to 0 between July 2019 and January 2023. Trump argued on social media that Venezuela failed to take back migrants from the US – ask Colombia how that went for them…

Murban futures volumes have exploded in February and the Murban premium is flying ever higher! Read more page 2… A key theme of IE week has been to be a good boy or lady about OPEC quota compliance. There is a lot of pressure to publish or come up with analysis that paints a compliant bullish story. We were shocked about the widespread nature of the pressure tactics, the big names under the cosh and the consequences people have been threatened with. “I was there when XY called XX and said what we should publish,” said an employee at one of the companies. The chromosomal markers may help you solve the riddle. There have been calls, emails and direct pressure on media, consultants, ship trackers, and even government organizations! One of our sources said, regarding an international organization; wink, wink, “I was in a recent meeting (like really recently) where they were calling the entity all kinds of names.” My source was in the Middle East recently, and if you are in the oil circles you know where.

We’ve seen pancakes with bigger bumps than flat price today. Following yesterday’s collapse, Brent seemed to want a day to reset and allow some meetings to go ahead unperturbed by major market crashes or bounces. Maybe it went too far and actually ended the European session exactly where it was yesterday, at $72.83/bbl!

The North Sea window was almost as quiet as Dubai today. Only Mercuria rolled in to offer. Hey, if you buy a full VLCC’s worth of Midland in one window, you’ve got to offload it somehow… The offer of a 10-14 March at Dated +$1 didn’t attract any interest from lethargic buyers busy planning their next IE week outings.

Following yesterday’s slaughter, Brent flat price held steady in the low-$73 range through Asian trading. It closed at $73.34/bbl. Post-window it dipped below $73 again. Meanwhile, in Dubai the silence is deafening. Sellers have really gone MIA. Or maybe the imbibement disabled them. Only Unipec turned up at all really today, making only minimal efforts to offer. But at least the Chinese turned up. Chevron and Reliance have really disappeared into the dust. The buyers laid siege to the sellers’ castle and there was nobody home to defend it. The bid/offer spread was a gaping chasm as no seller made any significant effort. By the window’s close, the best bid came from Vitol at $76.05, while Unipec’s best offer came to $76.45. If you ever wanted a visualisation of how cagey the trading was, voilà!

Chaos reigns! While everyone was busy mingling at IE week, everything dumped! And we mean…everything! Oil, equities, Bitcoin, US Treasury yields… they all got a pounding. Even gold dumped 2%, turning back from its exceptional uptrend, as hedge funds closed even winning positions. Time to offset some losses? Red everywhere! All across different assets, the longs got massacred. The only thing making gains today seemed to be the VIX volatility index, up almost 5.5%! Weak US consumer confidence and tariff anxieties have been mixed into a potent cocktail.

As of the week ending 21 February, volumes for key exchange traded futures contracts saw broad-based declines on a week-on-week basis. Only M2 gasoil futures increased at all, edging up just over 1%. At least until today, there’s been some calm in the markets, as participants got some respite after January’s madness.

The Dubai market went to sleep! All the traders could not be bothered to pull up their depleted guns, and those in London preferred to nurse their heads wondering: ‘why did I do it again! Don’t I know it hurts in the morning? 🥴 Not a single trade! The Dubai window players clearly had enough of convergence central that we saw in yesterday’s session. Sellers Chevron and Reliance completed some convergences yesterday, clocking a grand total of 3 cargoes! But today both had disappeared into the night, as if they’d been abducted by aliens. There wasn’t even a whisper of either the Americans or the Indians in this morning’s window. The only one who showed up to offer was Unipec and even they only put in a half-hearted attempt. And so there was not a single trade ☹. Bidders were far more numerous, with BP and Vitol leading the charge. They raised bids repeatedly but Unipec’s offers remained elusively high. And when they did close the gap, neither side wanted to budge from their final entry, putting Dubai at $77.795. Sometimes naughty traders spot an opportunity and come up with interesting bids or offers, sort of when the cat is away, the mice come out and play!

The day is upon us. The Officials are delighted to offer the latest addition to the Benchmark Publication – our very own Dated Brent assessment. Today Dated Brent was assessed at $74.60/bbl. In the physical, the window was soft… again… The flow of Midland continues unabating. Mercuria, Exxon, BP and Unipec were all trying to flog the stuff. After persistent lowering from Mercuria, Petroineos snapped up a ripe CIF midland at Dated plus $0.80 for 8-12 March. Cepsa also lifted Exxon for a 18-22 March Midland at Dated plus $1. Mercuria was offering Forties, at -10c, but no one showed interest.

Markets opened International Energy Week well down, still suffering with Friday’s hangover, as key participants prepare for a frantic week of conferences and boozy meetings in London But in Dubai it’s finally convergence o’clock!! On the 16th trading day of February, Chevron declared a cargo to PetroChina. We only had to wait until the final week of the month to get one, quite a change in pace from the prior few months. But you wait for a bus and three turn up at the same time. As well as Chevron’s convergence with PetroChina, Reliance declared an Upper Zakum to PetroChina and another of the same grade to Vitol.

The market jumped and dumped. From over $77 yesterday afternoon, flat price declined steadily early today throughout Asian trading and made it to lunchtime in London just above $76. And then Team America slam dunked it. Brent collapsed to below $75 and just about clawed its way above to close at $75.01/bbl! $75 has been a sticky level in recent weeks, so how well can flat price hold on this time?