Dated v Brent

The spread between Crude Oil benchmarks for physical cargo loading windows (Dated Brent) and the most liquid benchmark (Brent).

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Dated Brent Report – Rolling Down

The geopolitical risk premium may have faded, but the continued rally in Brent structure highlights the market’s resilience. Futures spreads have been on a steady upward trend since the beginning of May, with Sep/Oct Brent strongly backwardated above $1/bbl (time of writing). The market has fundamental strength, with strong refinery margins that are a driver of crude demand. Resurgent distillate strength took the market by storm, but something has to give. Product cracks would eventually correct lower on account of higher production. At the same time, hot temperatures across Europe and heat-related disruption would force refiners to cut their run rates, tempering crude demand. Nonetheless, Forties saw buying from Chinese players (Petroineos and Unipec) in the physical window, taking advantage of momentary Dated weakness and Dubai strength to fix arbs into Asia potentially.

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Dated Brent Report – Brent Synchronisation

It was quite the turnaround in Brent this week. Markets did a quick 180 as Middle East tensions de-escalated following Iran’s telegraphed attack at a US military base in Qatar, in retaliation for American strikes against its nuclear sites. The geopolitical risk premium popped like a balloon. Bullish momentum was already waning before that, given the market’s muted reaction on Monday’s open, alongside the presence of Eni and Shell in the physical window, selling Forties. So synchronised were the directions of Brent futures and Dated. The futures rally on 13 June magnified the squeeze on deliverable supplies in Cushing, tightening the market and buoying Total’s bids in the North Sea physical. DFLs were sent to the stratosphere, with Jul’25 touching $2/bbl. But as the old adage goes, what goes up must come down. Since the geopolitical risk deflation on 23 June, Brent spreads and DFLs are back to square one, before the geopolitical rally.

The forward curve is implying weaker, especially the prompt week of 30-04 July. Glencore joined in on the selling party on 24 June, offering Midland, while BP put a Midland cargo into chains, the first of the month. We expect this trend to continue, but the fate of the prompt rolls will depend on how much the physical weakens, forming a basis for our dual trade idea. The front (July rolls) are slightly oversold, while the back (August rolls) is more overbought. Even at lower levels, there is a lack of buying, apart from refiner bids. As Dated weakens, it may be more difficult to fix arbs from the US to Europe, especially amid higher freight rates. Demand outlets would need to come from Chinese players lifting Forties, which is currently setting the curve. Stronger refinery margins may provide renewed support, especially as we’ve observed hedge selling flows of cracks with the refinery margins forward curve shifting noticeably higher.

However, the market is more risk-off, given the elevated, headline-driven volatility recently. Despite our cautiously bearish views, renewed geopolitical headlines could see another upside breakout and volatility spike. Open interest is above average in Jun’25 contracts, but is trending in line with the 5-year average in Jul’25, underscoring the relatively subdued interest by the market. The question now becomes, how low does Dated Brent go? Prices have retraced below pre-event rally levels, but remain high on a notional basis. There is room to go longer, but are we approaching a consolidation?

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Dated Brent Report – I Feel It Fading

Well, the bull run did happen, and it was the perfect storm. Peak summer demand. Backwardated prompt spreads. Refineries are back from maintenance. Gold rush. The Dated structure saw a good rally with Total bidding the physical, and the June and July DFLs surpassed $1/bbl, and the bulls were rewarded for their patience, with the recent run likely funding their summer holidays. The rally was well telegraphed, but we do not think the rally has a further leg up, and hold a cautiously bearish view in the short term as the bulls fade out. The 16-20 Jun week is implied at nearly $1/bbl in the physical, but the bulls are in no rush, with the market seemingly happy with the $0.80/bbl level in the physical differential. Despite continued bids from Total and friends, we see this as an attempt to support the physical, rather than to push it higher. Whilst strong buying in the paper was seen on 6 June, it was not by the players with the ability to move the physical. With prompt weeks implying higher than the physical, rolls could roll down and see selling into pricing.

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Dated Brent Report – Back to Homeos-Dated

The Dated physical differential feels more supported after a choppy time last week, as it was not easily settled at the lower levels. There was strong buying in the front end, which allowed the differential to be priced at around +35c/bbl at the time of writing, which is more within the ‘normal’ range. In the physical, there was mostly WTI Midland being traded by a slew of different players, although a major filled a VLCC with Forties to send East. This is interesting considering how high the Dated/Dubai differential is. M1 Dated/Dubai is almost $2.00/bbl at the time of writing on 27 May, which is around its highest level since August 2024.

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Dated Brent Report – Where My Bulls At?

The North Sea crude market is mired in weakness, with bulls absolutely nowhere to be seen. WTI Midland cargos have been flooding the market, courtesy of Gunvor, and if this rate continues, they could single-handedly erase the US’s trade deficit. We initially thought the weakness was in response to OPEC+ cut rollbacks, but offers persisted despite a futures recovery. The amount of cargos offered is in the double digits, and Aramco and Exxon joined Gunvor on the sell side. Also on 12 May, Sinochem offered Forties, which was rare and unusual, flipping the script of the usual Chinese buying of Forties. The physical fell to lows of -$0.47/bbl on 8 May, though it has increased slightly to -$0.28/bbl by 12 May. Despite relative weakness in US grades and strength in refinery margins, there is a dearth of buying appetite in the front. Product markets seem well supplied, while West African (WAF) crude is overhung, add in weaker freight into the mix, and it is a cocktail for a fair bear run.

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Dated Brent Report – Marginal Disconnect

The Dated Brent market continues to drift lower, with the May’25 DFL falling from a high of over $1.40/bbl last Wednesday (23 Apr) to $0.70/bbl at the time of writing on 29 Apr. Simultaneously, the lower crude levels have supported the M1 European refinery margin, which strengthened from $6.75/bbl on 23 Apr to $8.10/bbl at the time of writing. We saw banks selling the DFL to hedge these high margin levels, which drift higher as Dated Brent weakens further.

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Dated Brent Report – Reload

The Dated market has retreated from the bullish hysteria since our last report on 1 April. There, intense stop-out flows saw decade-high trading volumes in the DFL. While the physical was more quiet, the futures was a completely different beast, and we have covered the ‘Liberation Day’ fuelled sell-off extensively elsewhere. Futures weakness was at odds with Dated strength, and physical differentials above $1/bbl is a testament to that. It is now a WTI story, with Midland setting the curve. Gunvor was the preeminent bullish player, taking May expiry cargos and lifting WTI Midland cargos in the window. Recently, Total and BP were also buyers. However, the bullish sentiment has waned, with US-based sellers, like Exxon, entering the fray. There is better selling in the front of the curve by multiple players, especially on 14 April, and it remains to be seen how much lower they can push down the diffs, if they continue.

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Dated Brent Report – Turning The Tide

At the time of our last report on 18 Mar, strength in the physical market we saw at the start of March had started to decline, with the Dated physical differential falling about 40c down to $0.45/bbl from 05-20 Mar. While we expected buying in the physical at these lower levels, buying has been much more aggressive and sudden than anticipated. In the window, we saw Vitol bidding Forties and Totsa came in bidding Midland, both in large volume. As a result, the physical diff rallied all the way up to $1.06/bbl, with BP being a seller in the physical at these high levels. The end of refinery maintenance season heading into April may have contributed to this rally, as demand for cargoes in May is quickly increasing.

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Dated Brent Report – Physical Maintenance

The Dated Brent physical has seen a strong performance, with the physical differential stable and rangebound around the 80c/bbl region. Prompt CFD rolls have rallied, with the 24-28 March 1-week roll rising to $0.35/bbl. This comes despite being in the midst of refinery maintenance season, and the strength can be attributed to robust refinery margins, which may have spurred some refineries to delay their schedules.

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Dated Brent Report – Riding the OPEC+ Wave

There is currently a divergence between sentiment in the physical and futures markets. The former has seen a strong performance with Totsa and Trafigura on the buy side of the physical. In contrast, Brent futures flat price and spreads were pressured lower following the surprise announcement by OPEC+ confirming their intention to bring back barrels in April. As a result, we expect prompt March Dated to price out strongly, while we hold a cautiously bearish view in the deferred. Reflecting this, the Bal-Mar/Apr DFL has risen from $0.15 to $0.40/bbl w/w.

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Dated Brent Report – All Eyes On Midland

This week, we have seen a good example of the dichotomy between Brent’s futures and the physical market that underpins it. In the physical, it seems that the market has found a floor this week. Equinor and Gunvor were running down the physical premium with good offering, but this has been met with better buying now. On 17 Feb, Glencore, PetroIneos, and Totsa were bidding for Forties and Midland, and we expect some better support here with good refiner buying seen with decent margins. Our view is that for this month, there is not a lot of crude left in loading cycles for the North Sea grades. This leaves Midland’s availability key to the strength of Dated. The cold weather in the US, along with fog issues at ports, could cause some issues here, from what has been some strong export levels from the States.

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Dated Brent Report – Oil Market Yo-Yo

The re-election of President Trump has brought havoc and hysteria to oil market sentiment. Trump’s predictably unpredictable rhetoric and actions have created significant uncertainty and volatility for financial markets, which has reinforced large intraday swings in Brent futures and spreads. This filters into the Dated Brent market, where the financial meets the physical market. Physical differentials have taken a nosedive in line with weaker Brent spreads, falling to negative levels of -$0.18/bbl for the first time since early January. The herdy trading mentality of the Dated market was showcased once again, with the mighty BP, Equinor, Exxon, Gunvor, and Unipec offering a smorgasbord of cargos. Mercuria was, for the most part, alone on the buy side, taking one (many cargos) for the team.

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Dated Brent Report – Arb You Kidding Me?

The North Sea physical differential strengthened above $0.80/bbl last week but has since petered out, dropping to $0.69/bbl on 20 Jan. 20 Jan also saw five offers for WTI Midland in the window from Eni, Unipec, Shell and two offers from Gunvor, who interestingly was buying cargoes before this. We saw no bids in the window for the first time since 3 Jan.

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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.

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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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