Brent falls to $98 as rising Mideast exports weigh on sentiment

Increased Middle Eastern exports have eased some sell-side anxieties, although underlying geopolitical tensions remain, given the intensifying Houthi-Saudi conflict. In the news, Saudi energy minister Prince Abdulaziz said on Tuesday that oil pumped through the East-West pipeline reached 5.8mb on Tuesday morning. Japan aims to agree on action plans with its Asian partners to boost crude oil reserves across the region at a ministerial meeting of the Japan-led Asia Zero Emission Community (AZEC) in the Philippines on Thursday, the industry minister said on Tuesday. Shell CEO Wael Sawan said on Tuesday he sees the major’s competitive advantage in Venezuela in gas rather than in heavy oil, and the company will continue to look at other opportunities in the country. President Trump has temporarily eased limits on the use of tax-exempt red diesel in his latest bid to contain the fuel price crisis ahead of midterm elections. South Africa’s gasoline prices will hit a record 30.25 rand/litre (95-octane in Gauteng) from Oct 7 after the Iran war-driven oil shock, raising inflation risks and pressure on the central bank to hike rates. St. Croix’s idled refinery is targeting a phased restart in 2027 with capacity above 200 kb/d, thanks to interest from the US government, investors and a commercial partner committed to provide crude and buy its refined product. The US blockade has left at least 50 Iranian oil tankers stranded, with Iran loading no crude onto tankers in September, effectively choking off its seaborne oil exports. Finally, the Dec/Jan’26 and Dec/Jun’27 Brent futures spreads are at $2.50/bbl and $10.30/bbl respectively.

This morning in Dated we saw some initial balmo Oct DFL buying on screen at $14.00/bbl and a mm lifting high on 19-23 Oct v Cal Nov at $8.1/bbl. However Nov DFL opened a bit weaker, trading down to around $1.4 on the Dated to lead. Paper selling then came in on 19-23 Oct v Cal Nov and balmo Oct DFL buying eased, although saw some buying out of 2-6 Nov rolls. Further down the curve saw a major and refiner selling Jan and Feb DFL, as well as fund and trade selling q427 DFL down to $1.03/bbl.

This morning in Brent/Dubai continued to be quiet OTC. We priced weaker, down around $2/bbl to $7.57/bbl, which saw weakness in the dubai spreads and a rally in bd. The Nov/Dec dub spread moved down from $3.3/bbl to $2.7/bbl, half of this move coming overnight. During the day however the flow was buyside by Euro producer and refiner. The Nov B/D rallied from -$1.6/bbl to -$1/bbl. There continued to be no flow in the front B/D, smalls product buying of Q1 ,Q2 and Q3'27 B/D. There was also some Chinese buying of Dec Ice vs Oct Dub.

380 complex continued to rally this morning despite liquidty still being thin due to Golden Week. Nov/Dec 380 opened a dollar higher at $40.75/mt and traded at this level in the window, it traded up to $41.00/mt post widnow, Dec/Jan saw better volume than the prompt spread this morning and traded up from $24.50/mt to $25.00/mt in the window, it was then bid up a further 75c post window. Nov 380 crack saw the largest gain this morning, opening at $3.90/bbl before getting aggressively bid up on screen to $5.00/bbl over the course of the morning, therefore the Nov 380 E/W is trading around $94.00/mt. Barge complex remained illiquid this morning, the prompt spread has yet to trade while Dec/Jan traded at $12.75/mt in the window. Nov Barge crack has rallied this morning getting bid up on screen from -$10.80/bbl to -$9.90/bbl, it traded at -$10.40/bbl in the window.

It was very quiet pre window, but liquidity picked up into the window, both regions in VLSFO strengthened this morning. Nov/Dec Sing traded up from $33.50/mt to $35.00/mt pre window and then gained another 50c to $35.50/mt in the window, Dec/Jan traded up from $26.25/mt to $28.00/mt. Sing cracks saw real buying and strengthened considerably, Nov Sing crack opened nearly a dollar higher at $25.50/bbl, it was then bid up on screen to $26.25/bbl where it traded in the window and has rallied further to $26.60/bbl post window, Dec Sing crack was bid up from $22.80/bbl to $23.20/bbl. Euro spreads also traded higher this morning with Nov/Dec opening 75c higher at $12.00/mt, it rallied a further 50c to $12.50/mt post window. Nov Euro crack was choppy trading between -$1.10/bbl and -$0.55/bbl with no real axe. Due to the continued strength of Sing 0.5 the 0.5 E/W has strengthened beyond all-time highs, currently implied around $172.00/mt.

This morning in distillates, Sing gasoil spreads saw sell side interest, trading from $4.3 down to $4.05/bbl. EW was sell side initially before turning better bid, with Nov EW trading from -$100 down to -$104, then back to -$93/mt post window. Kero spreads saw buying in Dec/Jan at $3.9/bbl, while Q3 regrade saw selling off combos, trading at $1.60/bbl. Prompt ICE gasoil spreads sold off, with Nov/Dec trading from $43 down to $38.75/mt, while Dec cracks sold off to $69.5/bbl.

This morning in Gasoline, the east led the move lower and then recovered most of it before the window. Nov 92 cracks were well offered pre-window at $25/bbl before bouncing to $25.30/bbl trading end of window. 92 spreads were weaker, with Nov/Dec sold down from $8.20/bbl to $7.40/bbl before recovering to $7.90/bbl, while the Nov/Dec/Jan fly firmed from $3.50/bbl to $3.75/bbl. Nov EW softened through the window from -$5.50/bbl to -$5.75/bbl, while Q1'27 EW firmed to -$5.16/bbl. In the west, EBOB followed the same path. Nov cracks dipped to $30/bbl before recovering to $31/bbl, Q1'27 firmed to $22.16/bbl, and Nov/Dec bounced from $67/mt to $71/mt. Dec RBBRs firmed from $27.92/bbl to $28.89/bbl. The Nov arb dipped to 1.40c/gal in the window before returning to 1.80c/gal, and Q1'27 arbs softened to 24.82c/gal.

This morning in naphtha was choppy but firmer overall, with MOC flat bid and cracks moving (inversely) in line w/ volatile Brent. NWE naphtha cracks strengthened into the close, with Nov trading from -$4.85/bbl up to -$4.65/bbl, briefly falling to -$5/bbl before returning to -$4.65/bbl post-window; Q1 finished at -$6.35/bbl and the Q1/Q2 roll firmed 10c to $1.85/bbl. Spreads were quiet, with Nov/Dec at $27.50/mt and Dec/Jan at $15.50/mt. E/W was better bid, with Nov rising from $66/mt pre-window to $67/mt post and Q1 at $50/mt, while the Nov/Dec box was $0.50/mt. MOPJ was stronger on cracks, with Nov up from $2.20/bbl to $2.95/bbl, Dec from $1.85/bbl to $2.05/bbl, and Cal 27’ cracks trading -$4/bbl; spreads were mixed, with Nov/Dec at $27/mt, Dec/Jan easing to $26.50/mt and Jan/Apr trading at $73.5/mt.

This morning in NGLs, FEI opened strong with Nov FEI trading at $862/mt pre window before closing at $882/mt. This drove front end spreads higher with Nov/Dec FEI trading at $41/mt versus trading at $40/mt pre window. Dec/Dec'27 FEI also traded this morning holding firm around $217/mt trading multiple times at that level. There was significant buying interest in MOC contracts pre close, coming in at $882/mt. FEI/CP continued to move higher today off higher crude with Nov FEI/CP trading at $216/mt and $218/mt throughout the window. The Arb sold off slightly this morning with Nov LST/FEI trading at -$395/mt versus printing -$390/mt pre window. However, Nov LST was also strong this morning trading at 92.25c/gal versus 91c/gal print pre window. There was also some C4 CP trading this morning trading $706/mt post window up from $695/mt pre-window. This drove up the Nov/Dec spread up to $38/mt versus $36/mt print.

The Nasdaq hit all-time highs while the 30-year Treasury yield simultaneously made new cycle highs at 5.70% - the equity and bond market continue to tell very different stories. The dollar is grinding higher, EURUSD has fallen to 17-month lows with the Spanish election adding fresh pressure, and the 2s/10s curve continues to steepen, now at 49bp.

FRENCH CENTRAL BANK HEAD EMMANUEL MOULIN WARNS STATE AT RISK OF BEING ‘STRANGLED BY INTEREST RATES’ - FT

While The US economy has now experienced 78 consecutive months of expansion, the 6th-longest business cycle since 1854.

US consumer confidence is collapsing - the Conference Board index dropped 6.7 points in September to 81.9, its lowest since April 2014 and a fourth consecutive monthly decline totalling 11.2 points. The Present Situation Index hit its weakest level since February 2021 at 109.3, while the Expectations Index fell to 63.6 - a three-month losing streak to its lowest since April 2025. Weakness is broad-based across all age groups and income brackets, with consumers citing high prices, cost of living, and energy costs as the primary culprits. The equity market is at all-time highs. The consumer is not.

Contagion risk is rising in the European bond market: European government bonds are showing early signs of contagion, with France’s selloff spreading to Italy, Belgium, and Greece and producing some of their largest spread moves in years.

There are two very different markets right now. With the Nasdaq at new all-time highs, AI-related stocks are booming. Meanwhile, credit spreads for the weakest US companies have blown out to 12.15%, their widest level in nearly 4 years.

Short interest (as % of shares outstanding) in the Russell 2000 has risen to the 99.8th percentile.

An interesting take on the Fed from Mark Zandi (Chief economist at Moody’s Analytics) - The official 4.2% unemployment rate understates true labour market slack - a slack-adjusted measure that incorporates quits, hiring, and the prime-age employment-to-population ratio now sits at around 5.5%, versus just 1% at the height of the 2021-2022 inflationary surge. The Fed is therefore missing on both mandates by roughly equal margins: inflation running at 3.5%, nearly 1.5 points above target, while the labour market is equally far from full employment - a situation that textbook policy would suggest calls for no change in rates. Instead, the Fed hiked last month and is signalling more to come, raising the risk of a serious policy mistake.

Hedge funds hold one of the largest short positions on record in 10-year Treasury futures - 2.04 million contracts as of September 29, representing 36% of the market, down from a peak of 2.53 million contracts and 45% of open interest in August 2025, but nowhere near normal. To put that in context, before 2023 this short rarely exceeded 1 million contracts, reached only 10% of the market during the 2008 crisis, and peaked at just 18% during the 2022 bond selloff. Bessent knows exactly what he is sitting on - and so does anyone watching the potential for a violent short squeeze if the narrative shifts.

Raw sugar futures surge to a one-year high as global supply concerns intensify.