Distillates

The Jan’25 Brent futures contract strengthened marginally this morning, moving from $71.70/bbl at 07:00 GMT to touch $71.80/bbl at 10:30 GMT (time of writing). Price action was volatile this morning alongside fluctuating geopolitical risk premia, spiking to almost $72.10/bbl around 08:30 GMT before descending below $71.50/bbl at 10:00 GMT. We also saw downward pressure amid resuming Israel-Lebanon peace talks, with an Axios report stating that US President Biden’s senior advisors are travelling to Israel tomorrow in an attempt to close the ceasefire deal. In the news today, crude oil production at Mexican state-owned giant Pemex was at nearly 1.75mb/d in September, down 1.2% y/y, according to a note by Giovanni Staunovo. In other news, PetroVietnam said today that Saudi Aramco is looking to invest in oil refining, petrochemicals, and oil product distribution in Vietnam, as per S&P Global. Aramco CEO Amin Nasser stated the oil giant will send a working group to Vietnam soon to advance discussions on multiple projects, however, specific details are yet to be disclosed. Finally, CNOOC has signed an oil contract with Iraq’s state-run Midland Oil Company to develop the Block 7 field, located in the Diwaniyah province. While CNOOC anticipates a large discovery of crude oil, appraisals are needed to accurately understand Block 7’s reserve potential, as per Reuters. At the time of writing, the Jan/Feb’25 and Jan/Jul’25 Brent futures spreads stand at $0.35/bbl and $0.86/bbl, respectively.

The Jan’25 Brent futures contract strengthened from $70.90/bbl at 07:00 BST to $71.75/bbl at 10:35 BST (time of writing). Prices saw support this morning amid reports of Chinese power demand growing faster than expected in 2024. In the news today, according to the China Electricity Council’s Q3’24 report, the country now sees 2024 electricity consumption growing by 7% to 9.9 trillion kWh. In its previous report, the group had forecast 6.5% growth to 9.82 trillion kWh. In other news, Israel is maintaining the intensity of its attacks on Gaza, with a Reuters report stating at least 60 Palestinians were killed and dozens wounded in an Israeli strike on a residential building in the northern Gaza town of Beit Lahiya today. Finally, Reuters reports that Mexico has sent a crude oil cargo of 400kb to Cuba, which is expected to arrive by the end of the week. Cuba is currently experiencing a series of blackouts alongside food and fuel shortages. At the time of writing, the front-month (Jan/Feb’25) and six-month (Jan/Jul’25) Brent futures spreads are at $0.37/bbl and $1.04/bbl, respectively.

After selling off overnight to around $72.25/bbl following Israel’s Friday night retaliation against Iran for their 01 Oct attack, the Jan’25 Brent futures contract has seen further weakness this morning, moving from $72.55/bbl at 07:00 GMT down to $71.10/bbl at 10:20 GMT (time of writing). Crude oil prices declined as Israel’s attack left Iranian nuclear and oil infrastructure unscathed, easing fears of a potential supply disruption. In the news today, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said Iran will “use all available tools” to respond to the Israeli attack on Iran’s military infrastructure, as per Reuters. In other news, India’s Bharat Petroleum has stated that its Russian oil intake for crude processing has fallen to 34% between July and September this year due to maintenance of units at its Bina and Kochi refineries. The state-run company has a production capacity of about 706kb/d across its three refineries in India, according to a Reuters report. Finally, according to Libya’s National Oil Corporation, Eni and BP have resumed exploration in the Libyan Ghadames Basin, where onshore drilling has been halted since 2014. Meanwhile, Repsol is preparing to restart drilling in the Murzuq Basin, and OMV is to begin operations in the Sirte Basin in the coming weeks. At the time of writing, the front-month (Jan/Feb’25) and six-month (Jan/Jul’25) Brent futures spreads are at $0.31/bbl and $0.85/bbl, respectively.

The Dec’24 Brent futures contract saw sustained strength this morning, trading at $75.73/bbl at 07:00 BST and moving up to $76.50/bbl at 11:10 BST (time of writing). Price was supported amid intensifying regional conflict in the Middle East and reports of North Korean troops ready to aid Russia in Ukraine. In the news today, Israel has launched strikes on the Syrian capital Damascus and a military site near the city of Homs, killing one soldier and injuring seven others, as per Reuters. Meanwhile, Russian President Putin said today that the Middle East is on the brink of a full-scale war, in a statement made at a meeting of the BRICS+ group in Russia. In other news, Transocean is in talks to merge with rival offshore drilling contractor Seadrill, looking to capitalize on the boom in deepwater oil exploration, according to Bloomberg. After the announcement, US shares of Seadrill jumped 10% while Transocean shares were up 3.7%. Finally, refiners on the US Gulf Coast have been increasingly turning to Latin American heavy crude, with Mexican state-owned Pemex and Valero Energy both buying Colombian grades, as per Bloomberg. This came as the Trans Mountain line diverted Canadian oil to Asia, with US refiners seeing their usual supply thinning. At the time of writing, the front-month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.45/bbl and $1.86/bbl, respectively.

The Dec’24 Brent futures contract saw sustained strength this morning, trading at $75.73/bbl at 07:00 BST and moving up to $76.50/bbl at 11:10 BST (time of writing). Price was supported amid intensifying regional conflict in the Middle East and reports of North Korean troops ready to aid Russia in Ukraine. In the news today, Israel has launched strikes on the Syrian capital Damascus and a military site near the city of Homs, killing one soldier and injuring seven others, as per Reuters. Meanwhile, Russian President Putin said today that the Middle East is on the brink of a full-scale war, in a statement made at a meeting of the BRICS+ group in Russia. In other news, Transocean is in talks to merge with rival offshore drilling contractor Seadrill, looking to capitalize on the boom in deepwater oil exploration, according to Bloomberg. After the announcement, US shares of Seadrill jumped 10% while Transocean shares were up 3.7%. Finally, refiners on the US Gulf Coast have been increasingly turning to Latin American heavy crude, with Mexican state-owned Pemex and Valero Energy both buying Colombian grades, as per Bloomberg. This came as the Trans Mountain line diverted Canadian oil to Asia, with US refiners seeing their usual supply thinning. At the time of writing, the front-month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.45/bbl and $1.86/bbl, respectively.

The Dec’24 Brent futures contract saw weakness this morning, trading at $75.93/bbl at 07:00 BST and falling to $75.10/bbl at 11:10 BST (time of writing). After the release of API figures yesterday evening, showing US crude oil stocks rose far above market expectations of 0.3mb up to 1.64mb, price has declined further amid anticipation of EIA data releasing at 15:30 BST today, with the market expecting a 700kb build in US crude inventories. In the news today, Israeli strikes across Gaza have killed 20 people, with Israel stepping up their operation following the death of Hamas leader Yahya Sinwar last week. Meanwhile, US Secretary of State Antony Blinken urged Israel today to use this opportunity to end the war in Gaza, stating Israel should be looking to bring home remaining Gaza hostages and agree to a ceasefire. In other news, India’s Finance Ministry are considering a proposal to scrap the windfall tax on domestic crude oil production due to falling international crude prices, as per Reuters. Finally, Saudi Arabia’s economy is projected to grow by 4.4% in 2025 partly due to OPEC+ unwinding production cuts in December, a Reuters poll of economists showed. This would be Saudi Arabia’s highest rate of growth in three years, with only 1.3% growth expected for 2024. At the time of writing, the front-month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.37/bbl and $1.69/bbl, respectively.

The Dec’24 Brent futures contract found strength this morning, moving from $73.85/bbl at 07:00 BST up to $74.95/bbl at 11:20 BST (time of writing). Prices have been supported this morning as tensions heighten in the Middle East, with airlines including Emirates and Qatar Airways now suspending flights to Iran. In the news today, US Secretary of State Antony Blinken has arrived in Israel to meet Israeli Prime Minister Netanyahu and revive ceasefire talks. Just a few hours before Blinken’s arrival, Hezbollah has fired several missiles into Tel Aviv and Haifa, according to Financial Times. In other news, Russia’s seaborne crude shipments have risen to their highest level since June this year. Russia shipped 3.47mb/d of crude in the four weeks to 20 Oct, a 140kb/d jump in four-week average cargoes, as per data by Bloomberg. Finally, the Chinese Ministry of Commerce has increased China’s 2025 crude oil import quota for non-state-owned firms at 5.14mb/d. The ministry will add and adjust quotas based on companies’ demand and new capacity. At the time of writing, the front-month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.38/bbl and $1.63/bbl, respectively.