Distillates

The Jan’25 Brent futures contract rallied from $74.25/bbl at 12:00 GMT today up to $75.70/bbl just after 17:30 GMT (time of writing). Crude oil prices rose amid expectations of a 25 basis point Fed rate cut to be announced at 19:00 GMT tonight. Earlier today, the Bank of England cut interest rates by 25 bps from 5% to 4.75%. In the news today, Hezbollah lawmaker Ibrahim al-Moussawi said that the Lebanese group welcomes any effort to stop the conflict but does not pin hopes for a ceasefire on any particular US administration, as stated in a Reuters report. In other news, China’s crude oil imports remain low in October at 10.53mb/d (-9% y/y), marking the sixth straight month where oil imports have fallen compared to the same months in 2023, according to data from the General Administration of Customs. This follows reduced capacity at PetroChina’s largest refinery in Dalian and weak demand from independent Chinese refiners. Finally, Ghana’s crude oil output has increased by 10.7% y/y in the first six months of 2024, at 24.9mb for June 2024, the country’s Public Interest and Accountability Committee (PIAC) reported. The increase was primarily driven by Tullow Oil’s Jubilee South East (JSE) project, which commenced production in late 2023, as per Reuters. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.37/bbl and $1.44/bbl, respectively.

The Jan’25 Brent futures contract saw consistent strength this afternoon, ultimately increasing from $74.60/bbl at 12:00 GMT to $75.30/bbl at 17:40 GMT. Crude oil prices rallied from around $73.40/bbl at 13:50 GMT up to $75.92/bbl just after 16:00 GMT as the market reacted to increasing threats to US Gulf Coast oil production from Hurricane Rafael and US President Trump’s election victory. A build of nearly 2.15mb compared to an expected 1.8mb in US crude oil inventories for the week to 01 Nov, announced in EIA data released at 15:30 GMT, led to a 40c drop to $74.95/bbl but otherwise had little effect as Brent continued to strengthen. In the news today, Russian Energy Ministry data showed the nation’s crude oil production in October was at 8.97mb, up 3kb/d from September and just 5kb/d above the OPEC+ quota for the month. In other news, Iraq’s oil exports were recorded at 3.3mb/d in October, according to Oil Ministry figures, with the government continuing to restrain output in response to pressure from OPEC+. Finally, India’s oil demand rose by 2.9% y/y in October to nearly 20.04 million metric tons, with gasoline, LPG, and aviation turbine fuel accounting for the largest increases in demand, according to PPAC reposted in a note by Giovanni Staunovo. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.39/bbl and $1.52/bbl, respectively.

Jan’25 Brent futures flat price saw further support this afternoon, increasing from $75.35/bbl at 12:00 GMT up to $75.95/bbl at 17:30 GMT, before falling to $75.50/bbl around 18:00 GMT (time of writing). Crude oil prices were supported amid potential short covering and rebalancing of portfolios ahead of the US election, in addition to a sustained market reaction to OPEC delaying their December production hike until January. In the news today, Iranian crude oil supplied to China has reached its most expensive price in five years, with the discount of Iran Light crude to ICE Brent narrowing to below $4/bbl from between $5-6/bbl earlier this year, according to Reuters. This came as Iran’s cargo loadings slumped last month amid concerns that Israel would target Iranian energy facilities in their retaliatory missile attack.In other news, Marathon plans to operate its 13 refineries at 90% of combined capacity in Q4’24, amounting to production of 2.95mb/d, as per Reuters. Furthermore, Marathon’s Q3’24 profit beat Wall Street estimates on better-than-expected refining throughput of 3mb/d compared to the forecasted 2.84mb/d. Finally, state-run Oil India has missed its Q2’24 profit targets on lower crude prices and weak fuel demand, totalling around $218 million in comparison to analysts’ expectations of $222 million. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.40/bbl and $1.59/bbl, respectively.

The Jan’25 Brent futures contract initially saw weakness this afternoon, trading from $75.25/bbl at 12:00 GMT down to $74.30/bbl around 15:50 GMT, before recovering to $75.15/bbl at 17:45 GMT (time of writing). Despite profit-taking flows, prices overall have been supported following the OPEC+ decision to delay a production hike for another month. In the news today, according to a Reuters survey, OPEC oil output was up 195kb/d in October m/m, with Libya posting the largest gain of up to 400kb/d. Crude oil production in Venezuela reached 860kb/d, the highest since at least 2020, while Iraq cut crude oil output by 120kb/d, amid lower exports and domestic consumption. In other news, developing Tropical Storm Rafael is projected to strengthen into a hurricane late Tuesday as it moves northwest from the Caribbean towards offshore oil production areas in the Gulf of Mexico, as per the US National Hurricane Center. Finally, according to Argus Media, Asia-Pacific refiners have increased their intake of US light sweet WTI for November loading, buying around 1.3mb/d of WTI loading compared to roughly 800kb/d in October and could remain keen buyers in December. Meanwhile, European demand for crude is expected to rebound in December following the end of autumn refinery maintenance, with Ekofisk adding around 60c/bbl relative to WTI since mid-October. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.42/bbl and $1.57/bbl, respectively.

The Jan’25 Brent futures contract weakened this afternoon, moving from the $74.30/bbl level at 12:00 GMT down to $73.30/bbl at 17:30 GMT (time of writing). Crude oil prices sold-off 80c just after 14:20 GMT, declining to $73.47/bbl at 14:50 GMT, amid the release of US manufacturing PMI data at 14:00 GMT showing a contraction to 46.5 in October, compared to a forecast of 47.6. In the news today, according to a Bloomberg report, oil supplies from OPEC increased by 370kb/d to 29.9mb/d in October, with Libya adding 500kb/d after the end of the central bank feud and Iraq cutting 90kb/d. In other news, Venezuela’s oil exports have reached a four-year high, approaching 950kb/d in October, as per Reuters. The boost in oil exports is the result of increased crude output and more sales to India and the US, according to ship tracking data. Finally, Exxon reported $8.61 billion in their Q3-24 earnings, down 5% y/y, while hitting a 40-year liquids production high at 3.2mb/d. Meanwhile, Exxon has sold the Fos-sur-Mer refinery in France to a consortium composed of Entara and Trafigura. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.38/bbl and $1.27/bbl, respectively.

After rallying this morning, the Jan’25 Brent futures contract saw continued strength this afternoon, moving from $72.65/bbl at 12:00 GMT up to $73.23/bbl at 15:25 GMT, however, price tapered off to $72.75/bbl by 18:05 GMT (time of writing). Crude oil prices were supported with ongoing uncertainty regarding a potential Israel-Lebanon ceasefire deal. In the news today, the IMF has cut their Middle East GDP growth outlook to 2.1% for this year, slashed by 0.6% from their April forecast. According to the IMF, this comes amid continuing regional conflict and expectations of a delay in OPEC+ oil production cuts. In other news, TotalEnergies missed the analyst estimate of $4.27 billion profit for Q3’24, reporting an adjusted net income of $4.1 billion on weaker refining margins and lower LNG production. Finally, Rosneft’s Tuapse oil refinery, one of Russia’s biggest Black Sea refineries, is due to resume operations in November. The facility was suspended from 1 Oct because of low margins on refined fuels, however, is expected to process about 480,000 metric tons of crude oil next month, as per Reuters. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.37/bbl and $1.16/bbl, respectively.

The Jan’25 Brent futures contract strengthened this afternoon, increasing from $71.90/bbl at 12:00 GMT up to $72.35/bbl at 17:45 GMT (time of writing). Price spiked 75c up to $72.65/bbl shortly before 12:30 GMT amid an OPEC+ announcement that the oil production hike planned for December could be delayed by more than a month, as per Reuters. In addition, EIA stats released at 15:30 GMT for the week to 25 Oct showed a draw of 0.5mb in US crude oil inventories, which supported prices further. In the news today, US mediators are working on a 60-day ceasefire between Israel and Hezbollah, as per Reuters. Meanwhile, Israel has continued its attack on Lebanon, targeting the city of Baalbek today. In other news, according to a Bloomberg report, oil production in Guyana dropped 11% in Q3’24 while Exxon temporarily shut two of its three vessels for maintenance. Hess Corp., which has a 30% stake in the Stabroek Block, stated that its share of production declined to 170kb/d from 192kb/d in Q2’24. Finally, Russia’s Gazprom has boosted its 2024 investment plan by 4% to $16.9 billion thanks to rising exports and domestic supply. The company continues to develop projects aimed at increasing gas supply to China, according to Gazprom’s Deputy Chairman of the Management Committee, Famil Sadygov. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.37/bbl and $1.07/bbl, respectively.