Crude

After reaching nearly $77.90/bbl this morning, the Mar’25 Brent futures contract has weakened this afternoon, selling-off from $77.50/bbl around 1300 GMT down to $76.25/bbl at 1730 GMT (time of writing). Crude oil prices saw bearish sentiment alongside the release of EIA data at 1550 GMT today, which showed a lower-than-expected draw of 959kb in US crude oil inventories for the week ending 03 Jan, compared to a forecasted draw of 2mb. In the news today, the Ukrainian military said it set fire to a Russian oil depot which provided fuel to the Engels-2 military air base containing Russian nuclear bomber planes, as per Reuters. Meanwhile, a Russian regional governor Roman Busargin stated that a fire caused by a “mass drone attack” had broken out in Engels at an industrial site, which he did not name. In other news, India’s state-owned Oil and Natural Gas Corporation (ONGC) has hired BP to be the technical services provider at their Mumbai High oilfield, a move aimed at identifying improvements in the facilities to boost crude production. The oilfield hit a peak oil production of 471kb/d in March 1985, with output declining to around 134kb/d as of last year. Finally, strong European demand for Guyana’s crude has pushed the country’s oil exports up by 54% to 582kb/d in 2024, according to Reuters citing LSEG shipping data. Since Guyana began exporting oil in early 2020, it is now the fifth largest Latin American crude exporter after Brazil, Mexico, Venezuela, and Colombia. Finally, at the time of writing, the Mar/Apr’25 and Mar/Sep’25 Brent futures spreads stand at $0.62/bbl and $2.63/bbl, respectively.

The Mar’25 Brent futures contract strengthened above $77/bbl at noon GMT today, where it met resistance and softened to $76.70/bbl at 14:15 GMT. Since then, the benchmark crude futures contract has continued to oscillate between these ranges, seeing resistance at $77.15/bbl and support at $76.65/bbl, and stands at $76.95/bbl at 17:30 GMT (time of writing).

After seeing strength this morning, the Mar’25 Brent futures continued to rise from $76.80/bbl at 1200 GMT up to $77.50/bbl at 1515 GMT, before declining to $76.30/bbl at 1740 GMT (time of writing). In the news today, the Biden administration has banned oil drilling in large coastal areas ahead of President-elect Trump’s inauguration. President Biden is issuing two Presidential Memoranda to protect more than 625 million acres off the East and West coasts, including the eastern Gulf of Mexico and parts of the Bering Sea in Alaska, indefinitely prohibiting these areas from federal offshore oil and gas leasing. In other news, Sudan has lifted a nearly year-long force majeure on pipelines transporting South Sudan’s oil through Sudan to the Red Sea, Reuters reported citing a letter from Sudan’s Energy Ministry. South Sudan’s crude exports reached an annual peak of 186kb/d in January 2024, falling to 58kb/d by December 2024, according to tanker tracking data compiled by Bloomberg. Finally, India’s SPR is looking to expand its inventories, having issued a notice to private firms inviting them to bid for a storage site of 2.5 million metric tonnes at Padur, according to Reuters. India’s underground SPR storage has a total approximate capacity of 5.33 million metric tonnes of crude oil, as per India’s Ministry of Petroleum and Natural Gas. At the time of writing, the Mar/Apr ’25 and Mar/Sep ’25 Brent futures spreads stand at $0.62/bbl and $2.61/bbl, respectively.

After seeing weakness this morning, the Mar’25 Brent futures contract recovered this afternoon, increasing from $75.60/bbl at around 1100 GMT up to $76.60/bbl at 1730 GMT (time of writing). In the news today, Venezuela’s oil exports rose 10.5% y/y in 2024 to an average 772kb/d, with exports to the US soaring 64% to 222kb/d last year, according to data compiled by Reuters. A large share of the year’s export gains came from Chevron’s shipments of Venezuelan crude to the US under a license in place since early 2023. In addition, Venezuela’s crude exports to China were down 18% y/y to 351kb/d, while exports to India jumped to 63kb/d this year from just over 10kb/d in 2023. In other news, China’s CNPC is expected to boost crude production capacity at its West Qurna 1 oilfield in Iraq from the current 550kb/d capacity to 800kb/d by 2028 and 1.2mb/d by 2035, the project’s subsurface manager Cai Kaiping stated. Finally, Middle Eastern crude oil grades strengthened in the final week of December on robust demand from Asian refiners and limited flows of Iranian and Russian barrels, as per Bloomberg. In late-December, Oman crude futures and partial lots of Dubai crude were priced at $1 or more over Brent, surging to a rare premium to the North Sea crude. At the time of writing, the Mar/Apr ’25 and Mar/Sep ’25 Brent futures spreads stand at $0.62/bbl and $2.70/bbl, respectively.

The Mar ’25 Brent futures contract continued to see support this afternoon as it rose from around $75.70/bbl at mid-day to $76.40/bbl at 17.15 GMT (time of writing). China’s manufacturing PMI dipped to 50.5 in December, missing forecasts, as output slowed and export orders shrank amid weak demand and tariff risks. While services and construction showed improvement, this weaker data could prompt the government to boost stimulus measures. Iran’s Deputy Foreign Minister, Majid Takht-Ravanchi, is visiting India for talks on resuming energy trade, which has plummeted since US sanctions in 2018 forced Indian refiners to stop buying Iranian oil. Bilateral trade fell from $17 billion in 2018-19 to $2.3 billion in 2022-23. US crude oil stocks decreased by 1.18 mb for the week ending 27 Dec, compared to a 4.24 mb drop the previous week and below the forecasted decline of 2.75 mb, according to the EIA. The latest Dallas Fed Energy Survey showed Dallas’ energy sector grew in Q4, with activity rising to 6.0 from -5.9 in Q3 and outlook improving to 7.1. Oil production was steady, while gas production edged lower. At the time of writing, the Mar/Apr ’25 and Mar/Sep ’25 Brent futures spreads stand at $0.49/bbl and $2.40/bbl, respectively.

The Mar’25 Brent futures contract was initially supported around the $74.50/bbl level this morning at 0800 GMT, before falling to $73.90/bbl at 1310 GMT (time of writing). In the news today, a Ukrainian drone attack in western Russia caused a fuel spill and fire at an oil depot according to Vasily Anokhin, the governor of Russia’s Smolensk region. Meanwhile, Gazprom said that it would pump a reduced volume of gas to Europe via Ukraine today, as per Reuters. This comes as the Ukrainian gas transit deal is expected to expire on 1 January, following Russian President Vladimir Putin’s 26 Dec statement that there was insufficient time this year to negotiate a new agreement. In other news, Iran has appointed Ali-Mohammad Mousavi as its representative to OPEC, replacing Afshin Javan. Mousavi currently serves as Deputy Minister for International Affairs and Commerce at the Iranian Oil Ministry. Finally, President Xi Jinping said in a speech today that China’s 2024 GDP growth is projected to expand around 5%, reported by Xinhua. According to Bloomberg, economists forecast an expansion of 4.8% for China’s GDP this year. At the time of writing, the Mar/Apr’25 and Mar/Sep’25 Brent futures spreads stand at $0.41/bbl and $1.94/bbl, respectively.

The Mar’25 Brent futures contract rose this afternoon, from under $74.00/bbl at mid-day to $74.45/bbl at 1715 GMT. US SPR crude inventories increased by about 0.3mb last week, reaching 393.6mb. Sour crude rose by 0.3mb to 250.3mb, while sweet crude remained unchanged at 143.3mb. Nigeria’s state-owned National Petroleum Company announced that its second refinery in Warri, located in the southern region, is now operational. The 125 kb/d refinery, under a $898 million rehabilitation since 2021, is now running at 60% capacity, focusing on kerosene, diesel, and naphtha production, according to NNPC CEO Mele Kyari and the presidency. Iran’s non-oil exports surged 18% to $43.14 billion in the first nine months of the Iranian calendar year, driven by a 33% rise in petrochemical exports, totalling $19.7 billion. Export volumes grew 13.77%, while imports reached $50.89 billion, with higher per-ton values despite a drop in weight. China remained the top export market, followed by Iraq, the UAE, and Turkey. The Chicago PMI dropped to 36.9, signalling a deeper-than-expected contraction in the region’s manufacturing sector and potential bearish pressure on the US dollar. This was well below the forecast of 42.7, indicating a sharper slowdown than anticipated. At the time of writing, the Mar/Apr’25 and Mar/Sep’25 Brent futures spreads stand at $0.45/bbl and $2.07/bbl, respectively.

The Mar’25 Brent futures contract witnessed a rangebound afternoon, oscillating between $73.30/bbl and $73.70/bbl, and currently sits at $73.40/bbl at 17:20 GMT (time of writing).

The Mar’25 Brent futures flat price saw a volatile and choppier performance amid thinner liquidity on Tuesday, rising to $73/bbl by 11:20 GMT before selling off by 60c within 15 mins, and is printing $72.74/bbl at 13:15 GMT (time of writing). With trading volumes quieter during the holiday period, price action is expected to fluctuate around current levels in the short term, with traders in a tentative and wait-and-see mode ahead of the new year. In the news, Russian President Vladimir Putin has lifted a 2022 ban on transactions involving Rosneft shares, paving the way for potential sales, including stakes in German refineries, amid ongoing sanctions challenges and interest from Middle Eastern investors. Indian state refiners may turn to Middle Eastern spot crude to offset an 8-10mb shortfall in Russian oil for January, driven by rising Russian domestic demand and OPEC commitments, potentially raising costs due to less favourable economics. Indian Oil Corporation will invest 610 billion rupees ($7 billion) in a naphtha cracker project in Paradip, Odisha, with an initial agreement expected to be signed in January, complementing its existing 300kb/d refinery in the region. Finally, the front (Feb/Mar) and 6-month (Feb/Aug) Brent futures spreads are at $0.40/bbl and $1.92/bbl respectively.

The Feb’25 Brent futures flat price continued to slide on Monday afternoon, falling from the $72.70/bbl level at 11:00 GMT to $72/bbl by 16:50 GMT, before finding technical support and bouncing up to $72.12/bbl by 17:20 GMT (time of writing). In the news, India’s crude imports in November saw Middle Eastern oil rise to a 9-month high, accounting for 48%, while Russian oil fell to its lowest share in three quarters at 32%, driven by refinery maintenance and adherence to Middle Eastern supply contracts. Efforts to broker a Gaza ceasefire have gained momentum, with progress on key issues like prisoner exchanges and troop deployment, but major sticking points, including the duration of the ceasefire and the broader terms for ending the war, remain unresolved amid dire humanitarian conditions in the region. According to an EIA article, improved operational efficiency and technological advancements have enabled U.S. crude oil production in the Lower 48 states to reach a record 11.3 mb/d in November 2024, despite a declining rig count, with productivity per rig expected to rise further in 2025 due to continued innovation and new pipeline capacity. US SPR crude inventories rose by 0.3mb w/w to 393.3mb last week. Finally, the front (Feb/Mar) and 6-month (Feb/Aug) Brent futures spreads are at $0.29/bbl and $1.55/bbl respectively.

Feb’25 Brent futures failed to break through support at $72.00/bbl throughout this afternoon and rose to $73.00/bbl at 1720 GMT (time of writing). Kremlin spokesman Dmitry Peskov warned that potential G7 sanctions on Russia’s oil industry could destabilise global energy markets and prompt Russian countermeasures. Proposed measures include reducing the price cap on Russian oil from $60 to $40/bbl or banning its transportation and insurance, though no decision has been finalised. According to data from China’s General Administration of Customs, Russia increased oil exports to China by 1.65% year-on-year to 99 million tons from January to November, valued at $57.4 billion (+4.7%). The EIA forecasts U.S. energy consumption rising from 93.69 qBtu in 2023 to 95.15 qBtu in 2025, with liquid fuels averaging 20.29 mb/d in 2024 and 20.53 in 2025 and natural gas at 90.5 and 90.2 billion cubic feet/day, respectively. Russia remains China’s top oil supplier, followed by Saudi Arabia and Malaysia. Presidents Putin and Xi emphasised strengthening energy cooperation during their May meeting. At the time of writing, the front (Feb/Mar’25) and 6-month (Feb/Aug’25) Brent Futures spreads are at $0.39/bbl and $1.89/bbl, respectively.