Brent corrects lower to $87

Prices failed to break above $90/bbl, forming a double top pattern. In the news, top US fuel makers, including Marathon, Phillips 66, and Valero, boosted returns to shareholders in Q2 amid surging refinery margins, posting a combined Q2 profit of $12.6 billion, the most since Russia first invaded Ukraine in 2022. Gasoline and diesel prices are at a record seasonal high, according to the American Automobile Association, paying an average of $4/gal for gasoline and $5.40/gal for diesel in the second week of August for the first time ever. Saudi Arabia has resumed visible crude loading at the Ju’aymah offshore terminal, part of the Ras Tanura complex, with a 2mb VLCC spotted there for the first time in nearly a month. Oil companies operating in the declining North Sea will have to rapidly speed up the decommissioning of their wells as more fields run down, according to industry regulator the North Sea Transition Authority. Iraq’s SOMO said Adnoc was among firms buying its crude and sending out cargos through the Strait of Hormuz. Finally, the Oct/Nov’26 and Oct/Apr’27 Brent futures spreads are at $2.02/bbl and $8.91/bbl respectively.

Better offered this morning in Dated with balmo Aug DFL trading down to $2.4/bbl and Sep DFL down to $2.31/bbl. We also saw bal Aug/Nov DFL roll sold low at $0.62/bbl. However saw a buyer of 25-1 Sep DBL at $2.45/bbl. Further down the curve we saw a fund selling Q1'27 DFL down to $0.98/bbl with a Geneva trade on the buy side. We also saw selling of Q2'27, Q3'27 and Q4'27 DFL with Q3'27 DFL hit down to $0.43/bbl.

380 complex was better bid this morning, Middle Eastern tradehouse had real buying on Sep/Mar 380 spreads this morning, with Sep/Oct trading up to $33.50/mt pre window before trading back down to $32.25/mt. Sep 380 crack opened slightly lower early this morning before getting bid back up from -$3.00/bbl -$2.45/bbl, the crack then sold back down and closed around -$2.60/bbl. Barges were better bid this morning, Sep crack opened lower at -$10.65/bbl but got bid up to -$10.35/bbl in the window and bounced up a further 10c to -$10.25/bbl post window. Sep/Oct barges traded up from $13.00/mt to $14.25/mt. Sep e/w traded up to $50.00/mt during the window before selling back down to $49.25/mt post window.

VLSFO was quiet early on this morning, but picked up towards the end of the window. Sep/Oct Sing encountered some real buying later in the window trading up from $32.75/mt to $34.00/mt and then to $34.50/mt post window. Sep crack was also bid up trading up to $18.55/bbl in the window, this strength continued post window trading up to $18.80/bbl. Sep Euro crack traded at $7.25/bbl during the window, but has since traded up to $7.75/bbl post window, there was little spoken of Euro 0.5 spreads with Sep/Oct trading at $25.75/mt

Relatively quiet morning in Gasoline. Mixed interest in MOC with Sep better bid and Oct better offered, with 92 spreads finding some buying this morning – seeing funds buying Sep/Oct at $4.7/bbl. Refiners buyside of the Q4'92 crack at $14.4/bbl this morning with selling in Q4 EW at -$3.95/bbl, seeing Dec EW better bid. Jan+Feb arbs continue to be better offered today with 25.25c/gal getting hit.

Naphtha recovered slightly after recent weeks' weakness, with MOPJ MOC better bid but real selling from majors capping the front spread rally. MOPJ cracks initially stayed under pressure, with Sep trading down around -$2.10/bbl before recovering through the window to around -$1.40/bbl, while Sep/Oct opened lower near $18/mt before pushing back towards $19/mt. E/W was better offered in the front, with Sep easing to around $34/mt while Oct held around $35–35.50/mt. NWE naphtha was more mixed, with Sep cracks recovering from around -$5.75/bbl to -$5.35/bbl, while prompt spreads saw some scaleback selling, but steadied into the window, with Sep/Oct moving from around $19/mt back to $20.25/mt.

Very quiet start to the day in NGLs. Sep/Oct FEI opened at $26/mt, but following the phys window being offered, came off to close the morning at $23/mt. Oct/Nov also softened $1.5/mt, having traded at $12.5/mt earlier in the day. Q1 FEI/MOPJ was lifted at -$66/mt, $3 stronger than yesterday’s closing level. There was also buy side interest on the Sep FEI/CP, getting lifted at $100/mt, where it eventually closed the morning. Sep LST/FEI traded at -$305/mt before strengthening on the back of FEI weakness to settle at -$301/mt. End window on screen Sep FEI flat price was sold at $670/mt.

As expected inflation data leaves the Fed unlikely to hike rates this year, 2 year yields fall, the curve 2yr/10yr continues to steepen to 50 basis points, equities barely react while gold & precious metals continue their new bull run.

The July US CPI inflation numbers landed firmly in line with consensus forecasts across the board: Headline CPI of 3.4% YoY (0.1% MoM); and Core CPI of 2.5% YoY (0.2% MoM).

The US auctioned off 10-year bonds yesterday at the highest yields since 2007. The yield move has been driven by real yields (adjusted for inflation), which are hovering near the highest levels since 2008.

“Virtually nothing matters more to markets at present than the AI buildout. It’s such a sudden and massive stimulus for the US that it has shifted macroeconomic data.” Columbia Business School’s Stijn Van Nieuwerburgh argues that without it, the US would be in recession. He estimates AI infrastructure investment at roughly 2.8% of GDP - larger than the railroad boom - and it’s projected to keep rising.

SpaceX stock, extends gains to over +10% on the day, now up nearly +40% over the last five trading days.