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Technical Analysis Report: Distillates, Shooting Star

Over the past week, the M1 gasoil futures contract found support at the $700/mt level as its upward trend remains intact. For the uptrend to continue, it must overcome immediate resistance at $735/mt, which aligns with the highs from this week and February. A break above this may see the $765/mt level come into view, where prices saw resistance in January 2025 and May 2024. On the downside, should prices penetrate below the uptrend (yellow dashed line) and enter the Ichimoku cloud, the following line of defence is at the psychological level of $700/mt. Below this, support can be found at the structural 200-day moving average at $675/mt.

European Window: Brent Falls Below $69.00/bbl

The Sep’25 Brent Futures contract initially rallied to $69.02 at 13:34 BST before falling to $68.21 at 15:08. Prices have since slightly recovered to $68.33/bbl at 17:35 BST (time of writing). In the news, US Treasury Secretary Scott Bessent will meet with his Chinese counterpart in Stockholm next week to discuss a likely extension of 12 August deadline for a trade deal. Bessent described the current US-China trade relationship as “constructive,” highlighting recent progress including China ending its rare earth export ban and the US resuming key tech exports. Without a deal or extension, tariffs could revert to 145% on US goods and 125% on Chinese goods. In other news, Halliburton reported that declining crude production in Mexico is increasing pressure to revive business, but ongoing payment delays from state-run Pemex continue to hinder operations. Pemex’s crude and condensate output dropped 8.4% in May to 1.64 mb/d. Due to unresolved payment issues many oilfield service companies have scaled back activity. Halliburton expects its international revenue for 2025 to decline by mid-single digits, largely due to reduced activity in Mexico and Saudi Arabia. Russia’s oil and gas revenue is projected to drop by about 37% y/y in July 2025 to 680 Bn roubles, due to lower oil prices and a stronger rouble, according to Reuters estimates. The finance ministry has already cut its full-year revenue forecast from 10.94 trillion to 8.32 trillion roubles, down from 11.13 trillion in 2024. Official figures are expected on 5 August. Finally, the front-month Sep/Oct and 6-month Sep/Mar’26 spreads are at $0.79/bbl and $2.07/bbl respectively.

Dated Brent Report – Last Chance D(ated)

While outright values suggest that the physical market is tight, whether or not this translates to a bullish market is a subjective matter. Notional values are high, but CFD rolls continue to roll down weekly. The 21-25 July 1-week roll is down from $0.50 to $0.10/bbl, and the 28-01 Aug 1-week roll is down from $0.45 to $0.30/bbl. The culprit? A relentlessly strong physical market. The market is implying forward differentials at stratospherically high levels, so even if the physical strengthens, it is insufficient, weakening the CFD rolls. As it stands, early August weeks are pricing above $1/bbl. The 21 July physical window was constructive, with the physical rising from $0.69 to $0.77/bbl, but there are still ways to go.

Overnight & Singapore Window: Brent Softens to $68.57/bbl

The Sep’25 Brent Futures contract fell to $68.32/bbl at 09:46 BST before recovering to $68.73/bbl at 10:12 BST. Prices have since softened to $68.57/bbl at 11:15 BST (time of writing). In the news, Nigeria’s Dangote Oil Refinery plans to increase its processing capacity from 650 kb/d to 700 kb/d by the end of 2025, according to company president Aliko Dangote. While the RFCC unit is currently running at 85% due to maintenance, all other units are operating at or above full capacity, with some reaching 145%. In July, the refinery sourced 55% of its crude from US WTI Midland. Despite this, the refinery aims to rely solely on Nigerian crude by the end of the year. In other news, Indonesia’s sovereign wealth fund Danantara plans to sign an $8 Bn contract with US firm KBR Inc. to construct 17 modular refineries. The deal is part of a broader trade agreement with the US that reduced proposed tariffs on Indonesian goods from 32% to 19%. In total, potential US-Indonesia deals could reach $34 Bn. Norway’s oil and gas production in June surpassed official forecasts by 2.3%, according to the Norwegian Offshore Directorate. Despite exceeding expectations, total output was down 10.9% y/y due to increased maintenance across more than 90 offshore fields. Natural gas production averaged 292.3 mcm/d, beating the forecast of 283.6 mcm/d. Crude oil output declined to 1.68 mb/d from 1.73 mb/d in June 2024, though it still exceeded the projected 1.62 mb/d. Finally the front-month Sep/Oct spread is at $0.79/bbl and the six month Sep/Mar’26 spread is at $2.14/bbl.

Onyx Alpha: Buying the Dip

Another week brings another selection of new trade ideas from Onyx Research. This week, we look at trades in Distillate and NGL swaps. Our weekly Onyx Alpha report presents speculative and hedging trades based on technical analysis and data-driven tradecraft methods on Onyx Commitment of Traders (COT) and Flux Financials data.

European Window: Brent below $69/bbl

The Sep’25 Brent futures contract saw lower highs over the afternoon. The contract fell from over $69.20/bbl at 13.45 BST to below $68.45/bbl at 15.09 BST. Although the contract rose above $69.00/bbl around 16.05-16.15 BST, it failed to maintain this and is at $68.95/bbl at 17.20 BST (time of writing). The Lindsey Oil Refinery in North East Lincolnshire will shut after the government failed to find a buyer, following owner Prax’s administration last month, putting 420 jobs at risk. Energy Minister Michael Shanks criticised Prax’s handling, urged them to support workers, and announced guaranteed employment for the coming months plus government-funded training to help workers transition into clean energy jobs, while the Official Receiver seeks buyers for individual assets. Iraq plans to boost crude oil shipments next month, increasing destination-free Basrah Medium exports to around 18mb (20-30% above average). This expansion, part of a broader OPEC+ production surge amid a global supply surplus, includes both destination-free and restricted shipments of Basrah Medium, Basrah Heavy, and Qayara grades. Zambia’s state-owned Industrial Development Corp. signed an MoU with China’s Fujian Xiang Xin Corp. to build a $1.1 billion oil refinery in Ndola, Copperbelt province, with a planned capacity of 60kb/d. The IDC did not disclose the source or transport plans for the crude oil feedstock. Britain imposed new sanctions on two Russian firms: Intershipping Services and oil trader Litasco Middle East DMCC, to pressure Moscow, adding them to its Russia sanctions regime. The update also included 137 additional designations, according to a government notice. US Treasury Secretary Scott Bessent said that the next round of US-China talks may address China’s purchases of sanctioned Russian and Iranian oil, shifting trade negotiations toward national security issues. He warned that buyers of Russian oil could face up to 100% secondary tariffs, urging European allies to follow suit – “I would urge our European allies, who have talked a big game, to follow us if we implement these secondary tariffs”. At the time of writing, the front-month (Sep/Oct’25) and Sep/Mar’26 Brent futures spreads stand at $0.77/bbl and $2.13/bbl, respectively.

CFTC Weekly: Brent and WTI Divergence

In the week ending 15 Jul, exchange open interest in Brent and WTI futures increased by a combined 173mb (+3.66%). This is the second week of increasing risk in the crude futures benchmarks. This increase was fairly similar, on a percentage basis, with Brent recording a 95.35mb (+3.47%) increase, and WTI seeing OI increase by 77.87 (+3.91%). Looking at the combined futures’ speculative positioning changes in the week to 15 Jul, there was a 15.60mb drop in length from money managers, (-2.95%). Short positions increased by 17.34mb (+10.53%). This bearish position change was not uniform across WTI and Brent. Brent, in fact, saw the reverse, with net positioning increasing w/w. Prod/merc players, on the other hand, added both long and short positions in both contracts. There were more prod/merc long positions added in Brent and WTI. The week to 15 Jul saw crude contracts react to President Trump’s announcement that he plans to impose a 100% tariff on Russian goods, along with secondary sanctions on other countries that continue to buy oil from Russia, if a new agreement is not reached within 50 days.

Brent Forecast: 21st July 2025

An Unwinding of Upside Protection Last week, the European Union approved its 18th package of sanctions against Russia over the war in Ukraine. The newest measures included an import ban on refined products processed from Russian crude oil in third

Overnight & Singapore Window: Brent sub-$69/bbl

Sep’25 Brent futures were supported in the early morning, from $69.25/bbl at 03.40 BST to fail to hold strength above $69.60/bbl at 06.45 BST. The contract has since softened to around $68.95/bbl at 11.25 BST (time of writing). Turkey will exit its crude oil pipeline agreement with Iraq, signed in 1973 and extended in 2010, effective 27 July 27 2026, per a presidential decree published today. The Kirkuk-Ceyhan pipeline, built under the deal, has been idle since March 2023 after an international court ruled Turkey breached the pact by letting the KRG export oil outside Iraq’s State Oil Marketing Organisation (SOMO). The announcement comes days after Baghdad and the Kurdistan Regional Government struck a new deal on 17 Jul requiring the KRG to deliver 230kb/d. The EU has sanctioned Iranian oil trader Hossein Shamkhani and his Dubai-based firms Admiral Group and Milavous Group for aiding Russia’s oil trade. Shamkhani, son of a top adviser to Iran’s Supreme Leader, was called “a central player” in Russia’s shadow fleet and accused of supporting a key revenue source for Moscow amid its war in Ukraine. BP named outsider Albert Manifold, former CEO of CRH, as its new chairman from October, succeeding Helge Lund amid investor pressure, weak shares, and a strategic shift away from renewables. Manifold, who grew CRH’s value nearly fivefold, is expected to push for cost cuts and a return to BP’s oil and gas focus as shares have lagged rivals. At the time of writing, the Sep/Oct’25 and Sep/Mar’26 Brent futures spreads stand at $0.78/bbl and $2.26/bbl, respectively.

European Window: Brent sells-off below $70/bbl

The Sep’25 Brent futures contract initially climbed to $70.75/bbl around 13:20 BST, where it met resistance. Despite fighting to remain above the critical $70/bbl handle at first, prices ultimately sold off and stand at $69.30/bbl at 17:30 BST (time of writing).

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