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TMNs: What’s the Score?

4 min read
Football kept on grassy football pitch.

Unlike England’s chances of winning Euro 2024 following an abysmal 1-0 friendly defeat to Iceland, Brent Futures have surged this week, with the prompt contract rising significantly from $77/bbl to almost $83/bbl. Regardless, we anticipate play from England so refined against Serbia in their opening game on Sunday that even the Dangote refinery would be proud. Additionally, undoubtedly similar to Kylian Mbappe throughout the tournament, long-positioned holders of the Jul LST/FEI contract were knee-sliding in celebration this week as its price rose from -$240/mt to above -$200/mt in the largest upward move seen since January. In macroeconomic news, the EU has certainly not been feeling the spirit of competition this week, announcing the introduction of 17-38% tariffs on EV imports from China. It remains to be seen whether their policymakers can stay on the ball and effectively initiate a European economic comeback, with German 10-year bond spreads widening to their highest level since Covid. Indeed, somehow, a loss to Scotland tomorrow in Germany’s opening game would be only the third most disastrous news for Chancellor Olaf Scholz this year following his SDP’s pitiful EU election results and persistently depressing German industrial production data. Meanwhile, regardless of its Euro 2024 exploits, Italy will receive worldwide attention this weekend, with Puglia hosting the G7’s annual summit. We hope the bridges built at the meeting are just as substantial as the builds announced by the EIA yesterday in US crude inventories.

In crude, we finally saw bullish indications in the North Sea market with the physical higher week-on-week and signs of demand in July-loading barrels. Notably, the DFLs rallied from their lows, with Jul DFL rallying from -20c/bbl to +27c/bbl and -20c/bbl on a Dated-to-Lead basis. Much of the strength was supported by a rebound in Brent spreads. Meanwhile, Dubai crude saw a bout of weakness as Brent/Dubai roofed on weaker demand in sour crude and market participants took profit in their Brent/Dubai shorts. 

In HSFO, the 380 market experienced weaker conditions with significant trading volumes, influenced by sell-side activity from Singapore trade houses and buy-side interest from Chinese majors and refiners, leading to varying spread values and a drop in the July crack to as low as -$8.40/bbl. Conversely, the VLSFO market was buoyed by strong buy-side interest, particularly from Singapore, driving up Jul/Aug and Aug/Sep spreads and cracks. Euro 0.5 saw weaker support with limited buying and increased sell-side activity, resulting in a modest rally in E/W boxes, supported by Q4 and Dec’24 buying by a major.

In distillates, ICE gasoil continued its upward trend with a boost from the June 12 contract expiration, with EIA stocks building. ARA barges saw heavy selling but also emerging buying interest. Sing Gasoil stocks drew down 18%, strengthening spreads. Euro Jet diffs slightly recovered, with less Asian supply expected. Regrade showed potential for further rallying, and HOGOs remained rangebound, with increased arbitrage encouraging diesel movement from the US to Europe amid weak demand

In gasoline, markets weakened as players exited positions and physical demand remained low, exacerbated by a brief respite from flaring at Whiting before the market collapsed. In the East, rebalancing efforts in the 92 market and strong freight kept the E/W spread capped, with some short covering and resistance at certain levels. EBOB saw continued weakness and fluctuating flows, with backend cracks offered but not bid, indicating likely short-lived rallies in Europe.

The naphtha market has been quiet, with a disconnect between well-bid paper spreads and weak physical demand, as no buyers are present. Despite some physical players selling cracks and support from gasnaph stopouts, the overall market remains inactive and restrained, with balanced MOC flows preventing momentum buildup. E/W spreads are slightly supported with speculative buying in winter E/W, while synthetic support from market makers helped to maintain stability amid the previous week’s sell-off in crude.

In NGLs, the LST market saw significant price increases this week, driven by active LST/FEI arb trading and a smaller-than-expected stock build reported by the EIA. The FEI market weakened significantly over the past week due to halted Chinese buying, poor cracking margins, a glut of product, and dramatically lower Panama Canal auction fees, leading to declining spreads and a weak market structure. The European propane market was also quite well-supported, given supply tightness from high Rhine water levels and persistent bidding from a major.

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Our team of skilled analysts, by utilising the depth and breadth of Onyx's proprietary data, position ourselves at the cutting edge of market analysis. This unique vantage point grants us an unparalleled perspective in the market, enabling us to identify emerging trends and lucrative opportunities.