Distillates

The Feb’25 Brent futures contract initially saw weakness this afternoon, falling from $73.60/bbl at 12:00 GMT down to $72.45/bbl around 16:10 GMT, before recovering to $73.65/bbl at 17:30 GMT (time of writing). Crude oil prices were elevated amid reports that Israel is preparing for potential strikes against Iranian nuclear infrastructure, according to The Times of Israel. In the news today, the Kremlin has stated that Russian President Putin backs Hungarian Prime Minister Orban’s efforts to achieve a Christmas ceasefire in Ukraine and a major exchange of prisoners of war, as per Reuters. In other news, Saudi Arabia plans to ship 46mb of crude oil to China in January, the highest volume since October and significantly higher than the 36.5mb of volume expected in December, as per Reuters. Sinopec and PetroChina is expected to lift more crude, as well as non-state owned refiners Rongsheng Petrochemical and Shenghong Petrochemical. Finally, Germany’s oil product sales increased 6.2% y/y to 7.602 million tons in September, with heating oil recording the highest rise of 45.9% y/y to 1.114 million tons and jet fuel seeing the biggest decline of 18.7% y/y to 0.714 million tons, according to BAFA. 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.

The Feb’25 Brent futures contract was supported this afternoon, rising from $73.00/bbl at 12:00 GMT up to $73.40/bbl at 17:50 GMT (time of writing). In the news today, OPEC’s monthly report has cut oil demand growth forecasts for this 2024 by 210kb/d to 1.6mb/d, marking the fifth consecutive month the cartel has reduced its demand projection, as per Bloomberg. Meanwhile, crude oil production from all OPEC members rose by 104kb/d in November m/m, due to increased output in Libya, Iran, and Nigeria, according to OPEC’s secondary sources. Nigeria’s oil production hit its highest level for 2024 in November with a total of 1.7mb/d (+13.3% m/m) of crude oil and condensate output. In other news, Exxon has unveiled plans to increase spending to $28-$33 billion annually with a goal of lifting oil and gas output by 18% by 2030. Furthermore, Exxon aims to triple its production in the Permian Basin to 2.3mb/d by 2030 and pump 1.3mb/d in Guyana, as per Reuters. Finally, At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.36/bbl and $1.45/bbl, respectively.

The Feb’25 Brent futures contract saw strength this afternoon, increasing from $71.80/bbl at 12:00 GMT up to a touch above $72.50/bbl at 17:50 GMT (time of writing). In the news today, Equinor stated that the start-up of their Johan Castberg oilfield in the Arctic has been postponed to January or February 2025 due to poor weather conditions. Johan Castberg, located in the Barents Sea, holds estimated recoverable volumes of 450mb to 650mb of crude oil and will be able to produce 220kb/d at its peak, according to Equinor. In other news, China National Petroleum Corporation (CNPC) said that Chinese oil demand could peak at 770 million metric tons as early as 2025 owing to the adoption of EVs and LNG trucks. This time last year, CNPC expected a peak of between 780-800 million metric tons in oil demand coming to China by 2030. Finally, Chevron has completed upgrades to its refinery in Pasadena, Texas, which is expected to increase processing capacity of lighter crudes by nearly 15% to 125kb/d. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.32/bbl and $1.30/bbl, respectively.

The Feb’25 Brent futures contract strengthened this afternoon, increasing from $71.90/bbl at 12:00 GMT up to $72.65/bbl shortly after 15:40 GMT, before falling to $72.35/bbl at 17:55 GMT (time of writing). Crude oil prices were supported this afternoon with news of supply disruption in Syria alongside China’s easing monetary policy stance aiding bullish sentiment. In the news today, a tanker carrying Iranian oil to Syria turned around in the Red Sea after the fall of Syrian President Bashar al-Assad. Syria has not exported oil since late 2011, when international sanctions came in force, and is reliant on fuel imports from Iran, according to Reuters. In other news, an explosion and fire at a fuel depot owned by energy major Eni near Florence, Italy, killed at least two people and injured nine. The depot receives, stores, and ships out gasoline, diesel, and jet fuel, connected to a refinery in Livorno via two pipelines also operated by Eni. At present, the explosion and fire have not affected storage tanks, according to Eni. Finally, Israeli Foreign Minister Gideon Saar said that Israel is now more optimistic about a possible hostage deal in Gaza, with indirect negotiations under way about the return of 100 hostages, as per Reuters. Foreign Minister Saar has stipulated “there will not be a ceasefire in Gaza without a hostage deal”. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.31/bbl and $1.17/bbl, respectively.

The Feb’25 Brent futures contract fell this afternoon from a high of $71.60/bbl at around 12:30 GMT down to $70.85/bbl at 15:30 GMT as support was seen at the lower Bollinger band and the prompt tose to $71.25/bbl at 17:30 GMT (time of writing). Oil supplies from Russia to the Czech Republic via the Druzhba pipeline restarted today after flows were interrupted earlier this week. “Oil supplies were restored this morning, and oil is flowing again through the Druzhba pipeline to the Czech Republic,” Unipetrol’s chief executive Mariusz Wnuk said in a post of the company on X (Twitter). Analysts at Barclays have said the oil market may be too pessimistic, as they believe tighter supply-demand dynamics could emerge by 2025 and support higher prices, with 2026 expected to be even tighter. Barclays predicts Brent is more likely to stay above $70/bbl than fall below unless there’s a significant drop in Iranian output. The US added 227,000 jobs in November, beating expectations, while unemployment rose to 4.2%. Growth was led by healthcare, hospitality, and manufacturing, though retail lost 28,000 jobs. Revised data showed stronger gains in September and October, supporting expectations for a Fed rate cut. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.33/bbl and $1.16/bbl, respectively.

The Feb’25 Brent futures contract fell this afternoon from $72.85/bbl at 11:35 GMT down to $72.05/bbl shortly before 18:00 GMT (time of writing). In the news today, OPEC+ delayed the revival of its oil production by three months to April, originally scheduled to begin in January with a hike of 180kb/d, according to Bloomberg. OPEC+ is expected to unwind the output cuts at a much slower rate than previously planned, though no official timeline has been specified. In other news, rising costs have squeezed intermediaries out of Russian oil trade with India due to high funding costs in Russia and lack of access to Western funds, according to six trading sources cited by Reuters. Meanwhile, Russian oil flows to the Czech Republic via the Druzhba pipeline were seen resuming today after payment issues linked to the transit via Ukraine caused a halt, two sources told Reuters. Finally, Iraq’s oil exports fell slightly in November to 3.296mb/d from 3.327mb/d in October, according to a senior Oil Ministry official. At the time of writing, the Feb/Mar’25 and Feb/Aug’25 Brent futures spreads stand at $0.42/bbl and $1.28/bbl, respectively.