Insight - Futures Report

M1 Brent futures saw a rally this week, hitting above the $80/bbl level for the first time since October. The Mar’25 futures contract increased from an intraday low of $76.10/bbl on 06 Jan up to $81.45/bbl at the time of writing on 18 Jan. While the Bollinger bands have widened amid increasing volatility, RSI shows that the market is in overbought territory and the MACD is indicating slowing bullish momentum, with the histogram difference between the MACD and EMA at flat.

Mar’25 Brent futures strengthened, rising from $73.40/bbl on 30 Dec to $76.90/bbl on 6 Jan, with higher highs and lows. The RSI entered overbought territory on Jan 3, while Bollinger bands widened due to increased volatility. The MACD indicated bullish momentum, but price gains may reflect opportunistic profit-taking in low liquidity.

Feb’25 Brent futures rose from $71.00/bbl on Dec 9 to $74.60/bbl on Dec 13, before correcting to $74.00/bbl on Dec 16. The daily upper Bollinger band acted as resistance at $74.50/bbl. Volatility slightly increased, although Bollinger bands remained narrow, while open interest dropped from 515mb to 420mb (Dec 4-12). The MACD signalled growing bullish momentum. Market support stemmed from speculation on China’s demand stimulus, despite no concrete promises and geopolitical concerns over Israel eyeing up the vulnerability of Iran’s nuclear facilities.

The directionless feeling in the crude market has failed to be alleviated this week. As expected, OPEC+ announced a three-month delay to its planned production increase, now set for April 2025. The group also extended its timeline for fully reversing production cuts by a year, pushing it to the end of 2026. Along with these changes, OPEC+ adjusted the baseline production levels for all member countries, extending them through 2026. This failed to inspire any strong reaction in the front of the curve as there were leaks preceding the information, and traders expected the barrels to be delayed. Feb’25 Brent futures traded in a tight range, peaking at $74.25/bbl on 4 Dec before dropping to $71.00/bbl by week’s end. MACD shows weak bearish momentum with stable Bollinger bands. Open interest in Feb’25 declined by 15mb since 29 Nov.

The crude oil market was rangebound and directionless in the past week, mostly stemming from the low liquidity associated with the US Thanksgiving holiday period. Price action initially came off by $2 on 25 Nov in response to the ceasefire agreement between Israel and the Lebanon-based Hezbollah, which diminished geopolitical risk. The market is also in a wait-and-see mode ahead of the OPEC+ meeting, which was delayed until 5 Dec. The group is largely expected to delay the return of barrels, indicating their support for higher prices instead of market share. Price action in the Feb’25 Brent came off from $74.50/bbl to $72.50/bbl on 25 Nov before largely rangebound between the $72 and $73/bbl range for the rest of the week.

After a rangebound start to the week in Brent futures, we saw steady strength as the Jan’25 contract rose from an intraday low of $71.10/bbl on 18 Nov to an intraday high of $74.65/bbl on 22 Nov. Among several bullish and bearish drivers, markets refocused on brewing geopolitical risk in the Russia-Ukraine conflict in particular, with Ukraine firing the US-made ATACMS and UK-made Storm Shadow directly into Russian territory for the first time since the start of the war. This week, Bollinger bands in the Jan’25 contract have narrowed marginally, while open interest continued to drop since its 31 Oct peak of 570mb, now at 311mb as of 21 Nov. We have yet to see a clear directional axe in the market, perhaps as traders await more concrete signs of any potential supply disruption that further escalations in the Russia-Ukraine conflict may bring.

The oil market continues to be in consolidatory wait-and-see mode regarding the gap between the “drill baby drill” campaign rhetoric and actual change to the physical crude supply from the US. The lack of meaningful price movement has been clear, and open interest in the Jan’25 contract continues to uniformly drop. The prompt has been supported from trading near recent bottoms and we have seen lower highs all month, forming a wedge. As volatility is not low, Bollinger bands are not narrowing; we may need to see greater consolidation before there is a significant breakout from between the 20-day moving average and the lower Bollinger band.

The market was quiet and tense ahead of the US election last week, and with Trump’s landslide victory, the political and oil infrastructure scenery of the US and abroad has been drastically transformed if we are to believe the campaign rhetoric. There has been a time of digestion in the market of potential changes to policy, speculation about geopolitical risk premiums, and other countries’ leaders’ responses. OPEC+ announced their cuts would continue for another month instead of their previously outlined return to the market in December, which they hinted at in the past month. This failed to have a huge effect as it was likely priced in during the rumour phase, although their decision shows the lack of strength of the market and brings into question when the demand will be strong enough to absorb these barrels

The Jan/Feb’25 Brent futures spread recovered from an intraday low of $0.30/bbl on 29 Oct to an intraday high of $0.46/bbl on 01 Nov, where it met resistance. This recovery emerged amid Iran threatening to retaliate against Israel’s attack, injecting further risk into the market.

In the early hours of Saturday, Israel launched a series of targeted airstrikes on Iranian military targets, killing 4. This move has temporarily eased the oil market’s anxieties, which have been high on Middle Eastern tensions and the geopolitical risk premium associated. Iran’s response to the strikes has been perceived as quite measured. Ayatollah Khamenei urged caution, emphasising that any response would be a military decision. Israel, on the other hand, seems satisfied with the operation, with Prime Minister Netanyahu describing it as precise and successful. The Biden administration appears keen to cool tensions ahead of the upcoming US election, which has Trump projected to win in many polls and betting sites.

The Brent futures complex sharply retraced lower last week as the geopolitical risk premia faded on the prospect that Israel’s retaliation strike against Iran will not be targeted towards its oil or nuclear facilities. The week ending 14 Oct saw Brent have its largest weekly decline since the week ending 6 Sep. Price action in the Dec’24 contract rapidly fell by $3 overnight on 15 Oct from around $77.50/bbl to $74.50/bbl following the release of the Washington Post article before stabilising and trading rangebound between $74-75/bbl.

This week, the Brent futures complex witnessed volatility amid the dichotomy between rising geopolitical tensions in the Middle East and nervousness surrounding oil demand growth in China, the world’s second-largest oil consumer. In the Middle East, the atmosphere remains tense as the world worriedly waits to see whether Israel will attack Iranian oil and nuclear infrastructure following Iran’s firing of over 180 ballistic missiles on 01 Oct in response to Israel expanding the war into Lebanon. The US has reportedly sent US troops to Israel along with an advanced anti-missile system in an attempt to “defend Israel”, adding to concerns of a significant escalation of the conflict. On the other hand, sentiment remains subdued due to China’s beleaguered economy and uninspiring fiscal reforms announced by the government. The market long awaited the Chinese Finance Minister Lan Fo’an’s comments on further stimulus packages on 12 Oct. While the ministry pledged to “significantly increase” debt to revive the economy, it did not mention an official nominal value of the fiscal package, leaving financial markets unsettled.

The Brent futures complex saw a substantial rally over the past week as price action surged on heightened geopolitical risk. Following Israel’s expansion of the war into Lebanon, Iran deployed ballistic missiles toward Israel on 1 October, marking a substantial escalation of the conflict. With Israel mulling its response and ahead of the 7 Oct anniversary of the Hamas attack, the market has been extremely wary, especially if regional oil production, infrastructure, and transportation are disrupted.

The Dec’24 Brent futures weekly high of $74.75/bbl on 24 Sep failed to hold, and it fell to $71.40/bbl on 26 Sep before correcting to around $72.50/bbl on 30 Sep with a possibly weak expiry in sight for the Nov’24 contract. It seems it failed again to break out of this rangebound regime that crude has traded in throughout September. For Dec’24 Brent this is between $75.00/bbl and $70.00/bbl.

The Nov’24 Brent future has seen strength in the week but failed to hold for long above $75.00/bbl. The main bullish driver for the week seemed to be the 50bp interest rate cut in the US, although the flaring up of tensions in the Middle East following Israel’s pager attack in Lebanon and followed by the airstrikes on 23 Sep. Outside of the US, economic news from China continues to bring demand into question with growing concerns about missing the 5% growth target and the upcoming press briefing by central bank governor Pan Gongsheng and top officials has fuelled speculation of increased stimulus measures. German manufacturing PMI fell for the fourth consecutive month to 4.03 and is now the lowest level seen in a year. Positioning in Brent continues to point to fairly rangebound movements as net positioning from managed by money players remained negative in the week to 17 Sep amid strong derisking in both crude contracts.

The Nov’24 Brent futures fell below $70/bbl on 10 Sep, reaching lows not seen since December 2021, before recovering to around $73/bbl by September 16, despite an oversold RSI and declining open interest. Meanwhile, the US 2-year treasury yield and Brent broke key support levels following hawkish BOJ comments and political developments, with the OIS now pricing in a more aggressive US Fed interest rate cut, indicating a potential recession. ICE COT data for the week ending September 10 shows money managers turning bearish, reducing speculative longs by 19.7% and increasing shorts by 15.5%, resulting in net positioning in Brent futures turning negative for the first time and the long:short ratio dropping to 0.80:1.00 for all weeks to 2013.

The Nov’24 Brent futures contract capitulated over the past week as bearish sentiment mounted. Prices fell by over 5% to their lowest level this year, only finding support at the $71-72/bbl level. Traders shifted their focus towards economic concerns, with the expectations of the resumption of Libyan supply and poor Chinese demand weighing on sentiment. Not even OPEC+ delaying their production hikes could reverse the tide as it confirmed the worsening demand outlook. Although futures market positioning is at historically short levels, there could be further room for prices to fall as the $70/bbl psychological support level looms large.

The Nov’24 Brent futures contract began strong last week, reaching $80.15/bbl on 26 Aug amid thin liquidity from players exiting for the bank holiday in the UK. This strength was also attributed to supply outages in Libya.

Last week, Brent futures slipped in the first half of the week and the market priced in an Israel-Hamas ceasefire, which did not materialise. Prices were then supported as the Fed meeting in Jackson Hole some dovish hope into the market. Federal Reserve Chair Jerome Powell emphasised the need to support a strong labour market and acknowledged the unmistakable cooling in labour conditions.

Last week, the Oct’24 Brent futures witnessed a significant sell-off, following which sentiment recovered. The benchmark crude futures contract went from $76.30/bbl on 06 Aug to $80.40/bbl on 12 Aug (at the time of writing).

Prices have fallen in the Oct’24 Brent futures, ICE LS gasoil futures and RBOB gasoline futures contracts in the week ending 05 Aug. While open interest has been on an uptick in gasoil and RBOB, Brent saw more de-risking into August.

We saw softer prices for the October Brent futures, ICE gasoil futures and US RBOB gasoline futures this week…

Technical indicators showed the major futures contracts selling off at the end of last week, highlighting oversold conditions for Brent, ICE LS gasoil and RBOB – based on both the RSI and Bollinger bands for the latter two.

Technical indicators showed the major futures contracts softening, with the RSI for ICE gasoil and Brent neutral and the RSI for RBOB dropping out of the overbought territory as gasoline traded extremely flat in the week.

Technical indicators showed the major futures contracts teetering on overbought in the Bollinger bands as the strength emanated from crude and was held well in the products.

Technical indicators showed major strength across the Brent, gasoil, and RBOB futures benchmarks with their relative strength index (RSI) entering overbought territory. Flat price has continued its uptrend as short covering flows continued, while participants look to position in anticipation of greater summer demand.

Technical indicators showed major strength in both crude and products this week, following Brent’s rally to above $85/bbl. Brent, gasoil, and RBOB futures all saw their RSIs hover just below overbought territory at 65, 68, and 64, respectively. Bollinger

Technical indicators showed a resurgence of strength from crude and into the products, as all 3 futures rallied in the week, lifting them all to the neutral territory for RSI and Bollinger band.

Technical indicators highlight that prices in the Aug Brent futures, ICE LS gasoil futures, and RBOB futures fell below their respective lower Bollinger bands, indicating a foray into oversold conditions before recovering towards the end of the week.

Technical indicators showed all products seeing volatility decreasing in the week, with the Bollinger bands narrowing.

Technical indicators indicate an RSI that has lifted out of oversold territory for Brent, ICE gasoil and RBOB gasoline futures although other indicators flag short-term bearish momentum

Technical indicators indicate an oversold RSI for Brent, ICE gasoil and RBOB gasoline futures alongside flat price that traded below all three contracts’ respective 20-day simple moving averages, flagging bearish short-term momentum. Moreover, Bollinger bands have now widened for the RBOB futures, signalling increased volatility in the contract.

Technical indicators indicated sideways price action in Brent and gasoil futures as the RSI moved out of oversold territory, with the lower Bollinger band providing a level of support. On the other hand, RBOB futures continued its downwards slide with the RSI remaining in oversold territory, as bearish sentiment continued to permeate the complex.

Technical indicators showed the major futures contracts falling into oversold territory on the back of a waning geopolitical risk premium and poor sentiment out of the US which exacerbated the sell-off. Bollinger bands have widened, indicating a sustained increase in volatility…

Technical indicators show that the July Brent futures contract still trades in the neutral territory although with a low RSI reading and amid narrowing Bollinger bands, signalling limited volatility.