Distillates

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.

Feb’25 Brent futures fell from $73.70/bbl at 13.30 GMT to $72.70/bbl at 17:00 GMT. A US government shutdown is looming as Congress scrambles to pass a stopgap bill, despite opposition from President-elect Donald Trump, according to Fox News. Economic data showed jobless claims dropped to 220,000 (below estimates) from 242,000 the previous week. US GDP saw annualised growth of 3.1% in Q3, and the Philadelphia Fed survey plunged to -16.4, compared to the predicted +3.0. BP and Iraq have agreed on key technical terms for redeveloping Kirkuk’s oil and gas fields, which still contain billions of barrels of recoverable oil. According to BP, a full contract is expected to be finalized by early next year. Oil operators in North Dakota, the third-largest oil-producing state in the US, are still working to restore facilities after October wildfires impacted key production areas. The fires caused a loss of 520kb and a decline in output to 1.178 mb/d from 1.2 mb/d in September. According to Sinopec, China’s oil consumption is projected to peak by 2027 at 800 million metric tons, equivalent to 16 million barrels per day. They say the decline in diesel and gasoline demand is driving the slowdown in the world’s largest oil importer. At the time of writing, the front (Feb/Mar’25) and 6-month (Feb/Aug’25) Brent Futures spreads are at $0.40/bbl and $1.78/bbl, respectively.

The Feb Brent Futures contract has seen mixed price action this afternoon, trading up to a high of $74.12 at 16:10 GMT before retracing to $73.61/bbl where it sits at the time of writing, as EIA data highlighted that crude inventories fell by 934kb to 421mb in the week, compared with analysts’ expectations in a Reuters poll for a 1.6mb draw. In headlines, Saudi Arabia’s crude oil exports rose to a three-month high in October, reaching 5.92 mb/d, up 174 kb/d from September, according to JODI data. Despite the increase in exports, crude production slightly declined to 8.972 mb/d as the Kingdom adhered to its pledge to produce “around 9 mb/d.” Meanwhile, Barclays downgraded the energy services sector from positive to neutral, citing a bearish oil macro environment, limited investor capital influx, and potential risks to 2025 earnings. The sector, after three years of double-digit growth, is now experiencing a mid-cycle spending plateau. At the time of writing, the front (Feb/Mar’25) and 6 month (Feb/Aug’25) Brent Futures spreads are at $0.38/bbl and $1.64/bbl, respectively.

The Feb’25 Brent futures flat price came off from the $73.20/bbl handle on Tuesday afternoon. Price action fell to lows of $72.50/bbl before recovering to $72.88/bbl by 17:20 GMT (time of writing). In the headlines, the UK imposed new sanctions on two oil trading firms, 2Rivers DMCC and 2Rivers Pte Ltd, and 20 shadow fleet vessels to curb Russian oil revenues and disrupt its illicit oil trade. Oil has washed ashore tens of kilometres of Russia’s Black Sea coast after two aging tankers were damaged in a storm, and now a third tanker has issued a distress signal, heightening fears of a worsening environmental disaster. Saudi Arabia has successfully extracted lithium from oilfield brine and plans to launch a commercial pilot program led by Lihytech, showcasing its move toward alternative wealth sources amid rising global demand for battery minerals. Kazakhstan has downgraded its 2024 oil output forecast to 87.8 million tons, citing maintenance at the Tengiz oilfield, with production totalling 80.5 million tons from January to November. Finally, the front (Feb/Mar) and 6-month (Feb/Aug) Brent futures spreads are at $0.32/bbl and $1.41/bbl respectively.

The Feb’25 Brent futures flat price traded within a 60c range on Monday afternoon. Price action reached highs of $74.30/bbl at 15:30 GMT before falling to $73.74/bbl at 16:30 and climbed to $74.11/bbl by 17:30 (time of writing). In the news, the EU has adopted its 15th sanctions package against Russia, targeting 52 new vessels from Russia’s shadow fleet, increasing the total number of such listings to 79. Shell and its partners will invest $5 billion in Nigeria’s Bonga North offshore oil project, expected to produce 110kb/d by the decade’s end, with 300 million barrels of oil equivalent recoverable from the area. According to a Bloomberg article, tanker rates for Middle East-China routes (TD3C) have fallen by a third this year due to weaker Chinese crude demand, driven by an economic slowdown, fuel-switching, and OPEC+ delays in restarting idled supply, impacting supertanker operators significantly. US SPR crude inventories rose by 0.5mb w/w to 393.0mb last week. Finally, the front (Feb/Mar) and 6-month (Feb/Aug) Brent futures spreads are at $0.38/bbl and $1.69/bbl respectively.

The Feb’25 Brent futures flat price initially saw a decline this afternoon from around $74.10/bbl at 12:00 GMT to $73.60/bbl at 14:05 GMT, before recovering to $74.40/bbl at 17:50 GMT (time of writing). Bullish sentiment has persisted as Russia launched an extensive aerial attack today on Ukraine’s power grid, using 93 missiles and nearly 200 drones, as per Reuters. Ukrainian officials stated six unspecified energy facilities were damaged in the western region of Lviv, in addition to serious damage to thermal power plants, according to DTEK, Ukraine’s largest energy provider. In other news, the presidential decree banning Russian companies from selling oil and petroleum products at the price cap set by the G7 countries has been extended until the end of June 2025, according to Russian news agency Interfax. Finally, US-based Kosmos Energy said it is in early preliminary discussions to buy Tullow Oil, with a view to potentially expanding their African oil assets. Kosmos currently has oil production and exploration assets in basins offshore Ghana and Equatorial Guinea, while Tullow Oil owns offshore production platforms in Ghana, Gabon and Cote d’Ivoire. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.39/bbl and $1.67/bbl, respectively.