Brent crude oil stable as US and Iran exchange strikes on ships

The US and Iran traded retaliatory strikes on ships over the weekend, while Iran says negotiations with Oman on Hormuz have reached the final stages. US Energy Secretary Chris Wright said on Sunday that the administration is focused on boosting crude and fuel supplies, but stopped short of explicitly ruling out an export ban. According to Russian envoy to New Denis Alipov, Russia is ready to supply India with as much oil as it needs to meet its energy requirements, whilst also warning that excluding Russian oil from the market would cause disruptions. Chinese refiners are ramping up crude buying amid tighter Middle East supply, pushing premiums for grades like Congo Djeno to as high as $20/bbl over Brent, while demand is being driven more by better refining margins, fuel exports and restocking than a structural recovery in Chinese oil consumption. The oil deal between Caracas and Washington risks violating Venezuelan law, where the Pentagon is due to take a 35% stake in a Venezuelan oil company that has been awarded the rights to one-fifth of the country’s reserves, involving a 100-year concession that would violate the Venezuelan constitution. Nov/Dec’26 and Nov/May’27 Brent futures spreads are at $3.86/bbl and $14.71/bbl respectively.

Slow start in Dated. We saw sellside interest initially in the front, with 21-25/9 v Cal Oct seeing tradehouse selling at $5.40/bbl, whilst balmo traded $6.30/bbl, before interest stepped in on the buyside with Bal Sep/Oct DFL trading $1.50/bbl. Oct DFL traded rangebound with a touch better buying from Sing, finding highs of $4.86/bbl.

This morning in Brent/Dubai was quiet except for the balmo B/D. The Oct bd gapped lower, down from $2.6/bbl to $2.2/bbl, and traded rangebound between $2/bbl and $2.2/bbl. There was some product selling that came in post the Sing window, with Q4'26 and Q2 +Q3'27 all offered. The balmo bd this morning was well bid by tradehouse, and offered by refiner, trading -$4.1/bbl pre window. We saw another very strong window, pricing around $15.2/bbl in balmo spread. The Dubai spreads also traded rangebound, the Sep/Oct Dub spread trading between $4.6/bbl to $4.8/bbl. Boxes all moved lower, but there was trade interest to buy Oct Nov box around -$1.6/bbl.

380 was not as thin as VLSFO this morning, spreads opened lower from Friday’s close but were better bid as morning progressed with Oct/Nov trading up to $14.75/mt. Oct 380 crack was initially better bid on screen trading up from -$6.25/bbl to -$5.90/bbl however post window it sold back down to -$6.25/bbl. Similar to Euro 0.5 the Barge complex was thin this morning, spreads have yet to trade while Oct crack traded between -$11.40/bbl and -$11.25/bbl.

It was a relatively quiet morning largely due to APPEC day one, spreads opened at similar levels to Friday’s close and continued to trade at these levels in low volume, Oct/Nov and Nov/Dec traded at $36.00/mt and $25.25/mt respectively. Oct crack opened higher this morning around $19.00/bbl, it then traded up to $19.30/bbl in the window before selling back down to $19.00/bbl post window. There was little spoken of Euro cracks or spreads this morning, Oct/Dec traded at $32.75/mt while Oct crack traded at $4.50/bbl.

This morning in distillates, Sing gasoil spreads were mixed, with Oct/Nov trading from $7.0 up to $7.1/bbl. Front EW and EFS saw good buying, with Oct EW trading from -$95 up to -$89.5/mt into end window. Front regrade was hit down to -$1.86/bbl from kero crack selling, and Oct/Nov kero sold down to $3.5/bbl. Prompt ICE gasoil spreads sold off end window before rallying, with Sep/Dec trading from $67.5 down to $63.5/mt, then back to $68.25/mt last. Nov cracks also sold off initially before firming, moving to $72 then back up to $75.3/bbl.

This morning 92 MOC was balanced. The East started off well bid, with Oct cracks trading up to highs of $23.60/bbl before getting sold down to $23/bbl post window as 92/MOPJ sellside interest came in. Spreads also opened strong, with Oct/Nov at $7.50/bbl but traded down to $7.30/bbl. EW was well bid, moving up from -$8.40/bbl to -$7.75/bbl in Oct with EBOB cracks seeing better sellside interest around $31.20/bbl. Spread interest was thin but was offerside as well, with Oct/Nov valued at $78/mt.

This morning in naphtha was quiet and thin due to APPEC, with MOC better bid, though there was some selling seen from majors. MOPJ was slightly softer versus last night, with Oct cracks trading at $2.70/bbl before going illiquid, while Q1 traded at flat. Front spreads weakened, legged short through flat price given poor liquidity, with Sep/Oct down to $19/mt versus $21/mt last night, while spreads further out held up better, with smalls Nov/Dec trading at $29/mt, broadly unchanged. E/W saw the main interest, with Oct bid from around $56/mt to $56.50/mt, while Q1'27 traded at $43.50/mt, supported by deferred MOPJ crack bids. NWE saw little interest across the board, with Oct trading at -$3.85/bbl post-window and Q1 around -$4.90/bbl, while spreads remained very illiquid.

Quiet morning in NGLs with US holiday, FEI initially opened stronger with spread buying and backend flat price buying. Arb buying then came in and FEI softened a touch with Oct arb trading up to -$370/mt and Dec at -$310/mt. FEI ended the window trading $799/mt in Oct with CP flat price trading $640/mt. No Europe traded.

Correlation between the 10Y and oil is the highest since the GFC.

German & Dutch gas storage levels look dangerously low heading towards winter.

The Dutch central bank moved 86 tonnes of gold out of New York and Ottawa to London. More than 1/4 of everything they held in North America. Done quietly between March and August, announced today. New York went from 31.3% of their reserves to 18.5%. London went from 18.1% to 32.1%. Stated reason is “increasing geopolitical unrest” and crisis readiness.

Short interest in the median S&P 500 stock is up to 3.2% of market cap, the highest level since 2009. This is now approaching the 2008 Financial Crisis peak of ~3.8%. By comparison, during the 2022 bear market, this percentage was ~1.7%. Furthermore, short interest among the most heavily shorted 10% of S&P 500 stocks is up to 8.0% of market cap, the highest in 8 years. Even during the 2000 Dot-Com Bubble burst, short interest never surged to these levels. The short trade is starting to look overcrowded.

Snowflake stock, surges over +22% after reporting stronger than expected earnings due to AI demand.