In the week ending 15 July, the Sep’25 Brent futures contract increased from a low of $69.25/bbl on 8 Jul to $70.65/bbl on 11 Jul. However, the $70/bbl again proved to be critical resistance for the contract, which subsequently eased to $68.87/bbl on 15 Jul. At the time of writing on 17 Jul, the contract stands at $68.55/bbl. Brent’s initial support likely emerged alongside a hike in Saudi Arabia’s official selling price (OSP) for August for its crude grades to Asia, alongside an increase in the kingdom’s crude oil exports to China, which flagged a rise in buy-side appetite from Chinese refiners. Moreover, some geopolitical risk has emerged from US President Donald Trump’s threat of sanctions on buyers of Russian exports following a 50-day deadline unless the Kremlin agrees to a peace deal with Ukraine. Nevertheless, these gains were capped by a reignition of tariff tensions alongside above-expected increases in US gasoline and distillate fuel oil inventories in the week ending 11 Jul. However, the latter would only be priced in following 16 Jul.
Notably, while Onyx’s CFTC predicting model has projected a bearish turn in managed-by-money net positioning in Brent futures, producers/merchants are expected to remain risk-on in the week ending 15 Jul, signalling a rise in producer and refiner hedging. Similarly, we expect a rise in producer/merchant selling in ICE LS gasoil and RBOB gasoline futures, which, if true, may further flag refiner hedging.
Further information on other categories and contracts can be found in the report.
