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European Window: Brent Supported at $74.40/bbl

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

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

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

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

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.

European Window: Brent Recovers To $73.65/bbl

The Feb’25 Brent futures contract initially saw weakness this afternoon, falling from $73.60/bbl at 12:00 GMT down to $72.45/bbl around 16:10 GMT, before recovering to $73.65/bbl at 17:30 GMT (time of writing). Crude oil prices were elevated amid reports that Israel is preparing for potential strikes against Iranian nuclear infrastructure, according to The Times of Israel. In the news today, the Kremlin has stated that Russian President Putin backs Hungarian Prime Minister Orban’s efforts to achieve a Christmas ceasefire in Ukraine and a major exchange of prisoners of war, as per Reuters. In other news, Saudi Arabia plans to ship 46mb of crude oil to China in January, the highest volume since October and significantly higher than the 36.5mb of volume expected in December, as per Reuters. Sinopec and PetroChina is expected to lift more crude, as well as non-state owned refiners Rongsheng Petrochemical and Shenghong Petrochemical. Finally, Germany’s oil product sales increased 6.2% y/y to 7.602 million tons in September, with heating oil recording the highest rise of 45.9% y/y to 1.114 million tons and jet fuel seeing the biggest decline of 18.7% y/y to 0.714 million tons, according to BAFA. 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.

CFTC Predictor: Brent Bulls Unwind For The Holidays?

In addition to our regular Monday CFTC COT analysis report, Onyx Insight will publish its own in-house CFTC COT forecast ahead of the official Friday report. The model forecasts changes in long and short positions using machine learning, utilising Onyx’s proprietary data.

Overnight & Singapore Window: Brent Weakens To $73.50/bbl

The Feb’25 Brent futures contract weakened this morning, increasing from $73.65/bbl at 07:00 GMT up to $73.95/bbl at 09:00 GMT, before falling back down to $73.50/bbl at 10:55 GMT (time of writing). In the news today, Kremlin spokesman Dmitry Peskov said that Russia will respond to Ukraine’s ATACMS strike on Russian territory, as per Reuters. This came as Russia claimed Ukraine targeted a military airfield on the Azov sea with six US-made ATACMS missiles on 11 Dec. In other news, Rosneft has agreed to supply nearly 500kb/d of crude oil to Indian private refiner Reliance in the biggest energy deal ever between the two countries, according to Reuters. The 10-year agreement amounts to approximately 0.5% of global supply and is worth $13 billion a year. Finally, Norway’s Vaar Energi has discovered additional oil reserves in the Arctic Goliat field, with recoverable resources estimated to be between 4 million and 25 million barrels of oil equivalent, the company said in a statement. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.40/bbl and $1.59/bbl, respectively.

European Window: Brent Inches Up To $73.40/bbl

The Feb’25 Brent futures contract was supported this afternoon, rising from $73.00/bbl at 12:00 GMT up to $73.40/bbl at 17:50 GMT (time of writing). In the news today, OPEC’s monthly report has cut oil demand growth forecasts for this 2024 by 210kb/d to 1.6mb/d, marking the fifth consecutive month the cartel has reduced its demand projection, as per Bloomberg. Meanwhile, crude oil production from all OPEC members rose by 104kb/d in November m/m, due to increased output in Libya, Iran, and Nigeria, according to OPEC’s secondary sources. Nigeria’s oil production hit its highest level for 2024 in November with a total of 1.7mb/d (+13.3% m/m) of crude oil and condensate output. In other news, Exxon has unveiled plans to increase spending to $28-$33 billion annually with a goal of lifting oil and gas output by 18% by 2030. Furthermore, Exxon aims to triple its production in the Permian Basin to 2.3mb/d by 2030 and pump 1.3mb/d in Guyana, as per Reuters. Finally, At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.36/bbl and $1.45/bbl, respectively.

Overnight & Singapore Window: Brent Supported At $72.85/bbl

After trading comfortably around $72.50/bbl overnight, the Feb’25 Brent futures contract has increased to $72.85/bbl this morning at 10:45 GMT (time of writing). Crude oil prices have been supported following the announcement of China’s looser monetary policy stance and expectations of a US Fed rate cut next week. In the news today, the Biden administration is considering harsher sanctions against Russian oil in the leadup to Donald Trump’s inauguration in January 2025. The sanctions could target Russian oil exports according to anonymous sources familiar with the matter, however, no exact details have been specified, as per Bloomberg. In other news, Russian crude oil flows through the Druzhba pipeline to the Czech Republic have continued as normal, operator MERO said following Ukrainian strikes on an oil depot in Russia’s Bryansk region last night, according to Reuters. Finally, Ecuador’s imports of refined products have been rising amid low refinery utilisation rates, with refining throughput for 2024 expected to drop 13.4% in 2024 y/y, as per S&P Global. Ecuador’s oil products imports were recorded at 4.1mb in September, 5mb for October, and 5.2mb in November. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.33/bbl and $1.27/bbl, respectively.

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