Markets are bullish again! The OPEC fakery on increasing volumes is suddenly becoming clear and everyone is waking up from their data slumber. We The Officials tell you, do not trust most government data as it is all massaged. OPEC data falls in this category, highly erroneous and one could claim that it is on purpose. But web of lies have a way of catching you. And yeah, we told we were bullish, didn’t we?
The elephant in the room for oil markets in June was the 12-day war between Iran and Israel, which ended swiftly after the US bombing of Iranian nuclear facilities at Fordo, Natanz and Isfahan on 22 June conducted under the mission name ‘Operation Midnight Hammer’. Iran retaliated on Monday, 23 June, in a well-choreographed manner, with a limited salvo of missiles aimed at the pre-emptively deserted Al Udeid Air Base in Qatar. No US assets or personnel were hit, and Qatari defence systems intercepted the Iranian missiles. Thereafter, colourful vernacular from President Trump ultimately sealed a ceasefire between the warring parties. The geopolitical whirlwind that swept through oil markets came and went. While one cannot exclude more flare-ups, the cease-fire is holding up for now, and the market can revert its focus on its supply/demand fundamentals.
Another week brings another selection of new trade ideas from Onyx Research. This week, we look at trades in NGLs and Naphtha swaps. Our weekly Onyx Alpha report presents speculative and hedging trades based on technical analysis and data-driven tradecraft methods on Onyx Commitment of Traders (COT) and Flux Financials data.
Onyx’s in-house CTA positioning model determines the net positioning of CTAs in a range of futures benchmarks. CTA positions were relatively flat in the week ending 7 July. Overall positioning is fairly neutral, at +12k lots on 7 July, which remains higher than the early June level of around -70k lots. Out of the futures benchmarks, net positioning is the lowest in Brent (-7k lots), and the highest in Gasoil (+13k lots). Heating Oil is the only other benchmark with a positive net position, at +10k lots.
What a hectic weekend: an outsized OPEC fake quota boost, massive Saudi OSPs increases and an all-you-can-eat buffet of TACOs on Sunday! OPEC wants to rip off the plaster and get out from under the reports of – hey, if there are no quotas, there are no concerns about compliance! 4D chess! So, OPEC goes up on paper, but the real increases are marginal while demand booms, so…prices go up!
The Sep’25 Brent futures contract gapped down at market opening to $67.54/bbl, prices climbed throughout the morning to $68.73/bbl at 11:15 BST (time of writing). The drop in price comes after OPEC+ agreed to raise production by 548 kb/d in August. Since April, OPEC+ has increased output by 138kb/d, followed by hikes of 411kb/d in May, June, and July. Reuters sources indicate that a 550kb/d increase is likely for September, completing the return of 2.17 mb/d. The total production increases since April would reach 2.47 mb/d, or nearly 2.5% of global demand. In other news, a $34 B memorandum of understanding (MoU) is expected to be signed between companies from Indonesia and the United States, including Indonesia’s state energy company Pertamina, Exxon Mobil Corp, and Chevron, according to a government official. The deal will also involve the purchase of US soybeans, corn, and cotton, as confirmed by Pujo Setio, a senior official at Indonesia’s Ministry of Economics. In June, fuel oil imports to the US Gulf Coast reached a record low of 213kb/d, down from 430kb/d last year. This drop was driven by reduced Mexican crude imports, which fell to their lowest level since April 2020, and tighter global fuel oil supplies. High-sulphur fuel oil prices rose as seasonal demand for power and US sanctions on Russian oil tightened supply. Finally the front-month Sep/Oct and the 6-month Sep/Mar spreads are at $1.20/bbl and $3.19/bbl respectively.
The Sep’25 Brent futures contract saw a week of stability in the week ending 1 July as prices largely traded around $67/bbl and stayed within a $2/bbl range. This was a period of consolidation after the volatility spikes due to the 12-day conflict between Israel and Iran, where prices rapidly sold off when the market did not expect any further disruptions in oil supply in the Strait of Hormuz. Following the deflation of the geopolitical risk premium, the market returned its focus towards fundamentals, including the OPEC+ meeting, macroeconomics, and supply and demand dynamics. Unsurprisingly, it was a risk-off week for money managers as they reduced both long and short positions. Selling from longs accelerated as positions declined by 26mb (-8%), the fastest rate since April. Meanwhile, short positions reduced by 2.1mb (-1.7%). As a result, the long:short ratio declined from 2.50:1.00 to 2.33:1.00 (17th percentile for all weeks since 2013).
This report covers the correlation in daily returns (on different rolling window periods) between the main energy contracts listed on the ICE and NYMEX exchange and the S&P 500 and the DXY dollar index.
It’s mayhem time… Based on numerous calls and communication with Prax, the refinery and the government it is quite clear nobody knows what’s happening. An employee told us they are unsure if they will have a job in a week’s time. Others have already taken to LinkedIn try to get a new job.
Not to worry, as Mr Miliband stepped into the breach and reassured us that the government is “ensuring continued safe operations at the site”. Note that they told us “stock levels are normal across the UK”, dodging the question of whether Lindsey itself has enough supply to last more than a few weeks. They also declined to comment when asked repeatedly where the money’s coming from! There certainly isn’t an abundance of the stuff…
9 July is the deadline, right? Oh, maybe it’s 1 August or 1 September instead… Trump is apparently planning to impose tariffs according to the new trade deals with those he whacked with his reciprocal tariffs. While the Americans are busy launching fireworks and Trump sharpens his pencil to sign the Big Beautiful Bill at 5pm, they don’t want to think about the looming tariff fight. But the market reaction was depressing on the Trump tariff news, as he crystallised the upcoming trade disruption he’s ready to unleash again, as oil just slid briefly below $68. The equity market struggled more, with S&P 500 futures dropping over 0.5% today, while gold rose as its safe haven status is reignited.
The front-month (Sep’25) Brent futures contract eased from $68.76/bbl at 08:55 BST to $67.85/bbl at 10:30 BST. Price action saw more support at this level and ticked up to $68.18/bbl at the time of writing (11:45 BST).
This report reviews weekly oil inventory data from the US EIA’s Weekly Petroleum Status Report, Global Insights’ ARA Independent Storage and International Enterprise’s Singapore product storage
Brent structure off on a flyer today, with the prompt spread briefly exceeding $1.30! It fell back by the close at $1.20. By contrast, flat price remained relatively contained. It launched an assault on the $69 mark in the late morning and held that into the afternoon, though slipped to $68.49/bbl by the close.
Mercuria was back in the North Sea window, dangling another Midland offer in there. But they offered a 26-30 July Midland at $2.10 over Dated early in the window and then left it to rest there, though it attracted no interest at all. And finally we saw a bid for Forties! After Totsa cleared out Shell’s Forties offer a couple of days ago, Unipec came in today to bid Forties at Dated +$1.30 – massive! It was also a very wide bid, for 13-31 July… And the physical differential jumped to 64c!
The Officials have asked senior personnel at IFAD (ICE is the majority shareholder and operator of the exchange) some questions regarding operations at the exchange and its delivery mechanism for Murban. Murban crude oil is the flagship powering the IFAD exchange and feeds the deliveries on the physical exchange. Based on agreements between ADNOC, its term lifters and equity producers they will use the monthly average price for Murban as formed on the IFAD exchange to set the Official Selling Price for Murban barrels loading two months forward.
The Sep’25 Brent futures contract initially climbed up to $68.73 at 07:27 BST before falling to $68.35/bbl at 08:34 BST. Prices have since jumped up to $68.95/bbl at 11:32 BST (time of writing). In the news, Russia’s oil and gas revenue dropped 33.7% y/y in June, reaching 494.8 Bn roubles ($6.29 Bn) due to weak oil prices and a stronger rouble. Oil and gas revenue also fell by 3.5% compared to May. In the first half of the year, revenue declined by nearly 17% compared to 2024, totalling 4.73 trillion roubles. The government has revised its oil and gas revenue forecast for the year down to 8.32 trillion roubles, from an initial 10.94 trillion. In other news, the Shandong provincial government in China has increased fuel oil import tax rebates for six independent refineries to help improve profitability as they face low margins and reduced fuel demand. The tax rebate increase, which applies to teapot refiners like Chambroad Petrochemicals and Hongrun Petrochemical, boosts the rebate for gasoline and diesel refined from imported fuel oil by 25%. The move aims to encourage these refiners to process fuel oil and tar-like heavy residue into transportation fuels. BlackRock is in talks with Saudi Aramco to divest its stake in the leasing rights of a natural gas pipeline network back to the state oil major, according to a Bloomberg report. BlackRock acquired the stake in 2021, and it is estimated to be worth billions of dollars. Finally, the front-month Sep/Oct spread is at $1.22/bbl and the 6-month Sep/Mar’26 spread is at $3.30/bbl.
