Distillates

After selling-off overnight, the Dec’24 Brent futures contract was on a steady upward trend this morning, trading at $71.30/bbl at 07:00 BST and rising to $71.76/bbl as of 11:30 BST (time of writing). In the news today, Chinese leaders at a Politburo meeting have pledged to deploy “necessary fiscal spending” to meet China’s 2024 growth target of 5%, in response to concerns about the effectiveness of the government stimulus. According to Reuters, the September meeting is not typically a forum for macroeconomic discussion, signalling growing anxiety over slowing growth in the country. In other news, a Thursday morning statement from Israeli Prime Minister Benjamin Netanyahu’s office stated that reports of a ceasefire with Hezbollah are incorrect, and refer to “an American-French proposal, to which the Prime Minister did not even respond”. In the meantime, the Prime Minister has instructed the IDF to continue fighting in full force. Finally, Saudi Arabia has scrapped its unofficial $100/bbl oil price target as it prepares to increase output, according to Financial Times. With OPEC+ planning to boost output towards the start of 2025, Saudi Arabia seeks to defend its market share by increasing production. At the time of writing, the front month (Dec/Jan’25) and six-month (Dec/Jun’25) Brent futures spreads are at $0.27/bbl and $0.60/bbl, respectively.

The Nov’24 Brent futures flat price was volatile this morning, trading at $74.90/bbl at 07:00 BST and reaching a high of $75.25/bbl at 10:00 BST before falling to $74.63/bbl around 11:30 BST (time of writing). Price has fluctuated in light of changing weather conditions in the US Gulf Coast, geopolitical risk in the Middle East, and expectations of a decline in US crude oil inventories ahead of EIA data releasing today at 15:30 BST. In the news, Storm Helene could develop into a Category 3 hurricane by the end of today, according to the US National Hurricane Center. The storm is reported to be moving east with oil platforms in the Gulf of Mexico likely to avoid any damage, however, 16% of crude oil production has been suspended as a precaution, amounting to 284kb/d, as per data by Reuters. In other news, US East Coast ports, including the port of New York and New Jersey, are bracing for the potential longshoremen’s strike that could start 1 Oct. The ports have put operational plans in place to ensure cargoes are collected before the 30 Sep deadline and minimize disruption. Finally, Israeli public broadcaster Kan has reported that the Israeli army is preparing for a possible ground operation in Lebanon, with Defence Minister Yoav Gallant seen meeting soldiers training for a ground invasion scenario. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.64/bbl and $1.60/bbl, respectively.

Nov’24 Brent futures contract found strong support this morning, trading at $74.70/bbl at 07:00 BST and reaching $75.86/bbl at 11:20 BST (time of writing). In the news today, Iran’s President Masoud Pezeshkian declared that he does not want to enter a full-blown conflict with Israel, warning of its “irreversible” consequences. Attending the UN General Assembly in New York, Pezeshkian said “we do not wish to be the cause of instability in the Middle East”. In other news, US Gulf Coast producers including BP and Chevron have begun evacuating oil platforms on the back of tropical storm Helene, expected to progress into a major hurricane with winds of up to 155 mph by Thursday. Finally, the People’s Bank of China (PBOC) has unveiled its biggest stimulus since the COVID-19 pandemic to set the country on track towards the government’s 5% growth target for this year. This plan includes PBOC cutting banks’ reserve requirement ratio (RRR) by 50 bps and freeing up $142.21 billion for lending, as per data by Reuters. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.75/bbl and $1.95/bbl, respectively.

Nov’24 Brent futures contract was volatile this morning, trading at $75.03/bbl at 07:00 BST and dipping down to a low of $74.25/bbl at 09:45 BST, before climbing up to $74.64/bbl at 11:25 BST (time of writing). In the news today, Israel has unleashed it most widespread wave of airstrikes on Lebanon, and warned citizens to evacuate areas near Hezbollah posts, according to Reuters. Israeli Defence Minister Yoav Gallant said today that the country is “deepening our attacks in Lebanon” and will continue until “we achieve our goal to return the northern residents safely to their homes”. In other news, Shell is preparing to shut in oil production at two of its platforms in the US Gulf of Mexico, Stones and Appomattox, as a tropical disturbance may cause a potential impact on their operations. Meanwhile, a port strike in the US looms on the horizon, threatening a potential supply chain crisis and increasing prices. Finally, China’s newest 400kb/d refiner Yulong has started up their crude unit and Libyan oil exports have rebounded above 700kb/d, according to Bloomberg, despite the ban on exports by Libya’s eastern government. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.77/bbl and $1.92/bbl, respectively.

Nov’24 Brent futures contract was rangebound between $74.50/bbl and $74.80/bbl throughout the morning, trading at $74.45/bbl at 11:25 BST (time of writing). In the news today, data from the General Administration of Chinese Customs stated that Chinese crude imports from Malaysia surged 31% (1.77 mb/d) y/y in August, making it China’s second-largest supplier after Russia. Furthermore, Malaysia serves as a major international terminal for crude oil shipments and has been allegedly linked to transportation of sanctioned Iranian and Venezuelan crude oil throughout Asia. In other news, after Hezbollah leader Hassan Nasrallah’s speech yesterday vowing to retaliate against the pager explosions, the conflict escalated further last night as Israeli warplanes carried out more than 52 airstrikes in southern Lebanon. In response, the Hezbollah chief stated this latest attack could be “a declaration of war”. Finally, Kazakhstan’s Karachaganak oilfield says it cut oil output from 5-9 Sep due to maintenance and is set to run another round of maintenance on 23-28 Sep. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.85/bbl and $2.06/bbl, respectively.Nov’24 Brent futures contract was rangebound between $74.50/bbl and $74.80/bbl throughout the morning, trading at $74.45/bbl at 11:25 BST (time of writing).

After the Nov’24 Brent futures contract came off yesterday evening following the Fed’s 50 bps rate cut, flat price strengthened his morning, trading at $73.94/bbl at 07:00 BST and moving up to the $74.35/bbl handle at 11:30 BST (time of writing). The Fed cut signals the start of easing and has fostered expectations of possible stronger future demand for crude oil. In the news today, Saudi Aramco has awarded a $2 billion deal to Italian engineering group Saipem as part of the expansion of the Marjan offshore field in Saudi Arabia, expected to provide a 300 kb/d boost in production capacity by 2025. In other news, analysts at Citi stated Brent crude prices in Q4 could be bolstered by demand possibly outstripping supply in the near-term and suggested that prices could have temporary support in the $70 to $75/bbl range. However, Citi remains strong in its view that Brent is set to decline to around $60/bbl in 2025. Finally, following the explosion of thousands of Hezbollah pagers in Lebanon earlier this week, other devices including radios, laptops and even solar power cells have detonated, injuring a total of 450 people and killing at least 20, according to Al Jazeera. Israel has yet to comment on the explosions meanwhile Hezbollah leader Hassan Nasrallah is due to give a televised address at 15:00 BST today. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.75/bbl and $1.92/bbl, respectively.