Brent Eases, Meanwhile India Vows to Protect Its Domestic Energy Security

In the news, India will continue prioritising its population's energy security despite US attempts to curb Russian oil and gas exports, much of which flows to India, the Foreign Ministry said overnight, warning that any US move affecting its energy security could strain bilateral ties. "The Indian side has also made clear its determination to take all necessary measures to protect its trade and economic interests," the ministry said. The statement follows 16 Sep’s passage of the latest anti-Russian sanctions bill, which imposes tariffs of up to 100% on importers of Russian energy and on countries continuing to do business with Russia. Elsewhere, Asian LNG demand is set to decline for a second straight year amid the US-Iran war. Estimates suggest that Asian demand will fall 3-10% from 2025 levels, with Northeast Asia bearing the brunt before a rebound in 2027. Lower average temperatures this year also cut power-generation needs, with power demand down year-on-year in both South Korea and Japan. China alone saw demand fall 6.1Mmt y/y, as per Kpler. Energy-intensive sectors like ceramics, methanol, and glass have had to cut output or shut plants as fuel costs turn uneconomical, while rapid inventory drawdowns, rising domestic gas output, and higher pipeline imports have further reduced China's LNG import needs. In Chile, the government has begun considering ethanol-blended gasoline as spiking oil prices strain the economy and government finances, according to documents seen by Reuters. The energy ministry has drafted a proposal to shift to E10 blending that could cut government fuel supply costs by roughly $107 million annually, per an internal memo. OPEC data shows Chile imported 181kb/d of crude in 2025. In other news, US Transportation Secretary Sean Duffy has said that the Trump administration is temporarily relaxing hours-of-service rules for truck drivers handling gasoline and diesel, citing supply and cost concerns. The 90-day waiver, effective Wednesday, allows drivers up to 16 hours within a 24-hour window, up from 14, provided they still take required rest breaks. Finally, as of the time of writing, the front-month (Nov/Dec’26) and 6-month (Nov/May’27) Brent futures spreads are at $4.18/bbl and $17.04/bbl, respectively.

Better selling again this morning in Dated with Oct'26 DFL trading down to $6.90/bbl although we did see a Balmo Sep'26 DFL buyer this morning, paying $16.50/bbl. We also saw a market maker bid high on 21-25 Sep/Cal Oct'26 at $13.90/bbl. We saw more selling out of 5-9 Oct with the 1-week sold at $4.00/bbl and 12-16 Oct 1-week offered at $2.80/bbl. However we did see a buyer of 6-8 Oct vs Dec'26 Brent futures. Saw buying of Dec'26 Dated vs Dec'26 Brent futures and Jan'27 Dated vs Jan'27 Brent futures in size as well as paper on both sides on Q1'27 DFL.

This morning in Brent/Dubai, we opened higher, up $1.00/bbl overnight and openeing around $0.00/bbl. There was some buying by refiner of Oct'26 and Q4'26 Brent/Dubai, but Chinese selling of Dec'26 ICE vs Oct'26 cross month. The Dubai spreads all opened lower, but quickly found some buying on screen. We rallied in the Oct/Nov'26 into the window, up from $5.40/bbl to $5.80/bbl, and with this the Oct'26 Brent/Dubai traded down from $0.00/bbl to -$0.60/bbl. The boxes all opened higher, but there was some Major buying Oct'26 through Jan'27 Dubai spreads, which saw those boxes retrace much of the move. We traded overall range-bound in the boxes.

In VLSFO, Sing 0.5 came in softer this morning, spreads were very thin and there was virtually no liquidity in the market, Oct/Nov'26 briefly traded down to $45.50/mt before rebounding to $56.50/mt. Oct'26 Sing crack was choppy, it opened around $23.50/bbl before quickly selling down to $22.85/bbl where it found support and got bid back up to $23.20/bbl on screen, post window it has sold back down on screen to $22.50/bbl. Euro 0.5 was thin this morning, particularly spreads which have yet to trade, Oct'26 Euro crack traded at $2.20/bbl during the window.

In HSFO, 380 opened considerably lower this morning, Oct/Nov'26 opened around $4.00/mt lower at $31.50/mt and has seen good liquidity at this level trading between $31.25/mt and $31.75/mt in decent size. It was a similar story for Oct'26 380 crack which opened 75c lower at -$3.00/bbl, it very briefly traded down to -$3.50/bbl before bouncing back up to $3.00/bbl and trading around this level during and after the window. Barge spreads were thin again this morning, Oct/Nov'26 opened lower at $13.50/mt but traded back up to $14.75/mt. Oct'26 barge crack saw higher volume than usual, there was buyside pressure and it got bid up from -$13.80/bbl to -$12.80/bbl, 380 E/W has therefore come off around $6.00/mt this morning and is currently $62.00/mt.

This morning in distillates, Sing gasoil spreads saw selling, with Oct/Nov trading from $10/bbl down to $9.40/bbl, while front E/W sold off from -$72/mt down to -$80/mt. Regrade saw buying in Oct at -$4.30/bbl, and kero spreads were well offered, with Feb/Mar trading down to $6.50/bbl. Prompt ICE gasoil spreads sold off, with Oct/Nov trading from $83/mt down to $72/mt, while Nov cracks fell $3.50/bbl to $87.50/bbl.

It was a strong morning on gasoline, 92 cracks opened higher at $29.60/bbl and climbed to $30.60/bbl during the window. Refiners and tradehouses were on the buyside of spreads, with Oct/Nov'26 getting lifted from $11.00/bbl to $11.60/bbl. E/W opened stronger at -$6.50/bbl but softened to -$7.00/bbl as EBOB strengthened. EBOB cracks rallied from $37.10/bbl to $37.50/bbl and Oct/Nov'26 saw buyside interest at $108.00/mt.

This morning in naphtha was choppy, with MOC better offered, front spreads initially bid despite lower Brent, and cracks supported early before fading as crude rallied, with MOPJ and front E/W going offered while NWE spreads held relatively better. MOPJ outright cracks were illiquid but broadly stable versus last night, with flat price implying Oct'26 around $1.25/bbl; spreads were volatile, with Oct/Nov'26 rising from $32.00/mt to $33.50/mt before falling to $31.50/mt, Nov/Dec'26 trading down to $31.00/mt from $32.00/mt, and Dec/Jan'27 trading at $27.00/mt before moving lower with crude. E/W weakened in the front, with Oct'26 initially bid at $62.50/mt before being offered down to $60.50/mt, while Q1'27 traded at $46.50/mt and was offered post-window at $46.00/mt. NWE naphtha cracks were briefly supported by lower overnight crude before weakening as Brent rallied, with Oct'26 moving from around -$5.00/bbl to -$5.50/bbl while Q1'27 held near -$5.60/bbl; spreads were better supported than MOPJ, with Oct/Nov'26 up from $30.00/mt to $31.00/mt, Dec/Jan'27 at $19.00/mt and the Oct/Nov'26/Dec'26 fly trading at $1.50/mt.

This morning in NGLs was initially weaker with Chinese flat price selling and spreads trading down. Having opened the day at $38.00/mt, Oct/Nov'26 FEI sold down to $36.00/mt, having rebounded slightly pre window. Nov/Dec'26 FEI also down on the day, closing the morning at $33.00/mt, from an opening level of $36.00/mt. Deferred FEI spreads had some buying from tradehouses, seeing Dec/Jan'27 trade at $30.00/mt, and Dec/Feb'27 at $58.50/mt. As FEI was softer, Oct'26 LST/FEI drifted higher, trading at -$424.00/mt, compared to last night’s close of -$427.00/mt, and was printing -$417.50/mt end window. FEI/CP also trading down today with CP flat price stickier on crude. Oct'26 trading down to $195.00/mt from an opening level of $203.50/mt, and Nov'26 traded down to $193.00/mt. End window on screen FEI flat price was lifted at $862.00/mt.

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 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.