In the week ending 23 Sep, the M1 Brent futures contract fell to $66/bbl before breaking out to the upside, closing above $68/bbl. Ultimately, prices saw a net decline from 16 Sep levels, as money managers took profit whilst taking stock of global economic uncertainty and a looming oil surplus. Rising geopolitical tensions have supported the sentiment in crude, as President Trump’s efforts to end the war in Ukraine continue to unfold, with his rhetoric becoming noticeably more conciliatory toward Kyiv. Distillate cracks saw continued strength, given Ukraine’s expanded targeting of Russian energy infrastructure, including export infrastructure. Gasoline cracks were fairly rangebound with their upside limited as the US began its shift towards winter spec gasoline, resulting in the continued weakness in the Transatlantic Arb (RBOB – EBOB).
This week, we anticipate money managers to trim their length in Brent and gasoil futures. In contrast, we expect speculative length to increase in RBOB futures, as a reflection of supply tightness concerns in the Atlantic Basin. We expect a risk-on week for physical players in Brent and gasoil, but a risk-off week in RBOB.
Further detailed information on other categories and contracts can be found in the report.
