M1 Brent futures fell into yet another lull, with the 50-day moving average still acting like a brick wall for more than two months now. On the products side, CTA net positioning in ICE gasoil and CME heating oil has flipped to net short, based on Flux Insight’s CTA model, while positioning in RBOB, Brent, and WTI futures has just been consolidating in the negatives all week. Risk appetite has been eroding into year-end, with open interest in ICE gasoil futures declining for a third consecutive week. On top of that, we seem to be stuck at an impasse on peace negotiations between the US and Russia, with this week’s efforts ending in Russian President Vladimir Putin telling European leaders he was ready for war and accusing them of sabotaging genuine Russian peace efforts. We’re also flying through a bit of a data fog, with continued lags in CME COT data as the US plays catch-up after the shutdown (thank God for Flux’s timely CTA positioning). With that in mind, focus has shifted to private labour market data such as the ADP jobs report on 03 Dec, which showed the US private sector cut 32,000 jobs, while companies with fewer than 50 employees cut 120,000 jobs. This report may well be the final nail in the wall for the Fed’s decision next week, with the CME FedWatch tool assigning an 89% probability to a 25 bps rate cut. The only real glimmer of transparency in this market has been OPEC+’s decision to create a mechanism for assessing member states’ maximum production capabilities through an independent auditor, a move the Saudi energy minister says will evaluate individual members’ maximum sustainable production capacity (MSC) to help stabilise markets and reward those with the willingness and the cash to invest. The MSC framework may well nudge fresh investment into oil and looks like another attempt by OPEC+ to capture market share while keeping its members (mostly) happy.
In crude, the North Sea physical has seen some softness amid a less aggressive buy-side. In the paper market, the flow has been highly mixed, although we now see a short bias in Dec rolls, with Jan rolls noting more support, hinting at potential Dated Brent support as risk appetite re-enters the market into the new year. In Dubai, trading volumes stayed very thin, with M1 Brent/Dubai sitting in a tight range between -$0.90/bbl and -$0.55/bbl.
In fuel oil, HSFO has weakened this week amid large MOC selling, which has pressured the front Sing 380 crack. Stop-outs in 3.5% barges this week have also been observed, further pressuring this contract. In VLSFO, Sing 0.5 has driven the complex, as the front crack saw pressure despite front spreads being supported. While spreads in the Jan-Jun region remained resilient, Jun/Dec saw a decline due to market makers selling.
In distillates, ICE gasoil futures and cracks have softened, especially in front spreads, as repeated stock builds and a risk-off tone weigh on prices and volumes. In Asia, the gasoil East/West has strengthened despite Singapore 10ppm spreads weakening on MOC selling. Nevertheless, combo buying in Cal’26 has supported the E/W and regrade, with the latter also strong on firm kerosene sentiment in Singapore. Balmo NWE jet diffs have climbed amid very near-term tightness in Europe, with deferred jet diffs fairly quiet.
Gasoline was strong initially. However, on 04 Dec, we are starting to see it come off a bit more. In Europe, physical E5 barges have been a bit higher, so the Bal-Dec/Jan’26 spread recovered well this week. We aren’t really seeing this reflected in the paper flows. There has been buying in the Q2’26 arb. There was sizeable buying of 92/MOPJ. E/W is swinging with the flow in each leg.
It was another quiet week in naphtha. European cracks were scaleback offered but have barely moved in the week. The front crack has ranged between -$4.80 and -$4.50/bbl. There has been some support from NWE gasnaph selling due to prices reaching seasonal highs. There have been some propane players buying backend MOPJ cracks, with some buying seen in the front.
In NGLs, C3 LST has seen a stronger week, on a crude basis. Good buy-side momentum from last week carried into this week, with 01 Dec seeing a well-bid US complex. EIA stats from 03 Dec, which showed a larger-than-expected draw in US propane stocks, further supported LST. International propane was also stronger this week, though it saw a weaker rally when compared to LST; FEI physical was well bid by trade houses this week. C3 CP has remained sticky while FEI/CP has seen some strength. We have also seen some front pronap buying this week. In butane, C4 ENT/C3 LST has been relatively quiet coming back from the Thanksgiving holiday.
