Edge Updates
Dated Brent Report – New Year New Bulls
The bears had their turn over the festive period, and the Dated Brent bulls have entered 2025 fully locked in. Physical differentials climbed above $0/bbl on 06 Jan, and the direction and momentum of the physical will dictate the market sentiment in the coming weeks. The theme over the Christmas period was bearish, where the physical differential was pressured below $0/bbl. We saw two trade houses and a major offer the prompt weeks, which saw the 23-27 Dec, 30-03 Jan, and 6-10 Jan crater. In addition, a significant buyer had disappeared from the bid side, which was significant. However, the new year has brought in new themes.
Dated Brent Report – Battle for the Barrels
There was a battle for the barrels in the North Sea, with Totsa and Trafigura buying heavily and Equinor and Gunvor on the sell side. We have seen this same group of players swaying the flow in the Dated market for a few weeks now. The comparable power in the buying and selling has allowed for the Dated physical differential to move very little. The diff has been oscillating around 100c/bbl for almost a month now, failing to maintain anything 10c above or below a dollar since mid-November.
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Dubai Market Report – What goes up must come down
Brent/Dubai has continued its downward grind, with the M1 contract falling to its lowest level since July. The Jan'25 contract reached lows of $0.10/bbl on 17 Dec, while the entire forward curve has shifted lower in an orderly fashion. The contango in the Brent/Dubai boxes is very orderly, without any kinks on the curve (see appendix). The medium sour crude market has continued to tighten as OPEC+ delayed their output hikes to Q2'25. Despite buying some time and supporting flat prices, our global crude balance suggests a bearish picture for 2025, with OPEC+ possibly needing to defer their output hikes further.
Dubai Market Report – Brent/Dubai getting low, low, low, low, low
The Brent/Dubai continues to narrow, with the front-month contract falling below $0.50/bbl, the lowest level for a front-month contract since September. On paper, Dubai crude has gained much of the strength lost in previous months. The fundamental story suggests a bullish market reaction to the expectation of OPEC+ prolonging their output cuts into Q1. Previously, the Brent/Dubai forward curve had priced in the expectation of extra barrels, which has supported outright levels. The entire forward curve has shifted lower from $1/bbl to around $0.80/bbl. We have officially returned to the 'standard' regime of Brent/Dubai selling, and Dubai spread buying, as evidenced by our market positioning data.
The Officials: North Sea churns
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Onyx Global Oil Balance
CFTC Weekly: ICE COT
The Officials: $80 inbound?
