Brent finds support at $93.50/bbl after the election-driven sell-off

Prices have since consolidated, recovering up to highs of $95.97/bbl by 09:30 GMT. Last night’s sell-off was driven by the Democrats’ midterm sweep, which markets interpreted as a constraint on further Iran military action. Following the Democrats’ win, oil industry executives and lobbyists are concerned that a proposed windfall tax could emerge as part of a broader agreement between Democrats and President Trump. China’s domestic diesel exports are expected to ease in November, with refiners having sold only 500kt of diesel for November-loading so far, after a surge in exports since July sent domestic stockpiles to multi-year lows. It was reported that a large-scale fire broke out at an oil refinery in Russia’ Ryazan after a drone attack overnight on Thursday. US shale producer APA surpassed Wall Street estimates for third-quarter profit on Wednesday, as higher oil prices helped counter a drop in output. The IRGC sad on Thursday that two oil tankers and a tugboat had caught fire in separate incidents after attempting to use unauthorised routes through the Strait of Hormuz. Finally, the Jan/Feb’27 and Jan/Jul’27 Brent futures spreads are at $2.89/bbl and $11.98/bbl respectively.

Busy morning, with December leading the Dated complex higher. Dec DFL pushed up from $3.10 to $4.35/bbl, with size going through at $3.62/bbl, more than $1 over last night’s close, and Dec-Feb DFL traded $3.40/bbl and has firmed since. Jan DFL was paid up from a $3.04 low to $3.60/bbl, and last traded $3.70/bbl, some 60c higher on the day. Balmo/Dec DFL edged up from -$3.25 to -$3.05/bbl. Dec Dated climbed from a $95.50/bbl low to $96.60/bbl, with size trading at $96.02, last seen at 96.29, and Dec/Jan Dated followed from $2.85 to $2.95/bbl in size on buying, about 80c up on the day. Jan Dated/Dubai firmed from $2.35 to $2.50/bbl. Further down the curve, Q1'27 DFL edged up from a $2.79 low to $3.02/bbl. In the days market, 04-08 Jan Dated was bid up from $94.65 to $94.70/bbl in size. Also saw 05 Nov v 12 Nov trading -$2.00/bbl, 17-23 Dec v Dec going through at -$0.40/bbl and 14-18 v 21-25 Dec sold at $0.60/bbl, while 04-08 Jan v Dec slipped from a -$1.50 high to -$1.80/bbl.

This morning in Brent/Dubai we ground lower on low volume. There was products and refiner selling of Q1 B/D, but the majority of the B/D trading was Cal Nov B/D. Refiner buyside, Chinese selling of Feb ICE vs Nov Dubai. There was buying of Dec Dub vs Feb ICE cross month by Chinese, and buying of Jan Dated/Dubai. The Dubai spreads were better bid, with tradehouse buying of Dec/Jan and Jan/Feb Dub spreads, the Dec/Jan trading up from $1.73/bbl to $2.12/bbl. The boxes were quiet, the Dec/Jan box rangebound around $0.2/bbl.

380 complex saw real buying today and much deeper liquidity after aggressively gapping lower yesterday, Dec/Jan has been bid up from $20.00/mt to $26.50/mt and Jan/Feb from $13.50/mt to $17.75/mt. Dec 380 crack was bid up from -$3.85/bbl to -$2.00/bbl by window start, and then to -$1.50/bbl post window, Dec 380 e/w has traded $10.00/mt higher to $77.00/mt. Barge complex was thin again this morning and price action was limited, Dec Barge crack traded between -$13.70/bbl and -$13.50/bbl while Dec/Jan and Jan/Feb traded at $9.00/mt and $10.50/mt respectively.

Low sulphur strengthened in both regions this morning, Sing spreads were better bid although liquidity was tight, Dec/Jan traded up from $23.00/mt to $26.50/mt and Jan/Feb from $19.50/mt to $23.25/mt, Dec Sing crack opened at $14.30/bbl and was bid up to $15.35/bbl by window open, it continued to see buying during and after the window and has traded up to $16.30/bbl. Euro cracks were much better bid this morning, Dec Euro crack was bid up from $0.20/bbl to $1.40/bbl by window end and it has since been bid up to $2.00/bbl, Dec 0.5 E/W has consistently been trading at $96.00/mt while Euro spreads remained relatively thin but traded higher with Dec/Jan trading a dollar higher to $19.50/mt.

This morning in distillates, Sing gasoil spreads were more offer side initially, with Feb/Mar trading down to $4.00/bbl, while kero spreads were also offered, with Mar/Jun trading at $11.80/bbl. E/W sold off early on, getting hit down to -$105/mt before turning bid post window and up to -$100/mt. Prompt ICE gasoil spreads were rangebound, with Dec/Jan weakening to $41.50/mt before firming back to $44.00/mt, while Jan futures cracks firmed to $73.30/bbl.

This morning in gasoline, East opens well bid with MOC better bid also. Spreads well bid to start with trade and major lifting, seeing Dec/Jan 92 getting lifted $0.4/bbl up to $0.9/bbl where it turns better offered into the end of the window – getting sold down to $0.75/bbl. Real selling interest in Jan/March 92 from a fund $1.6/bbl which gets lifted. Buying in Dec and Jan gasnaps this morning despite arb buying at 18.65c/gal in Jan and 17.8c/gal in Dec, with the Dec EBOB crack trading $13/bbl.

This morning in naphtha, MOC was bid, with spreads offered on higher Brent and EW initially bid before coming off. MOPJ saw early petchem buying in May and Q2 cracks around -$2.80/bbl; Dec rose from $2.85/bbl last night to $3.50/bbl before easing to $3.10/bbl post-window, with the Dec/Jan crack roll around $1.05/bbl. Spreads were offered but firmer versus last night, with Dec/Jan up $2/mt to $29/mt, Jan/Feb at $28.50/mt and Dec/Jun at $147/mt end-window. E/W weakened, with Dec rising to $66/mt before falling to $63.25/mt versus $64/mt last night, while heavy Q1 selling took it to $50/mt from $51.50/mt; Cal'28 traded at $25/mt and the Dec/Jan box was offered down to $7/mt. NWE Dec cracks opened unchanged at -$4.20/bbl, rallied to -$3.80/bbl and fell to -$4.25/bbl post-window, down $0.05/bbl versus last night; Q1 firmed from -$5.45/bbl to -$5.20/bbl and Cal traded at -$7.50/bbl versus -$7.60/bbl. Spreads recovered, with Dec/Jan rising from $19.50/mt to $22/mt versus $20/mt last night, while Jan/Feb traded at $23.25/mt.

This mornio $75.5/bbl.

This mornio $75.5/bbl.

A quiet morning in NGLs, FEI spreads were illiquid with Dec/Jan FEI trading at $53/mt. Jan/Feb FEI also saw selling at $55/mt. Dec/Mar FEI traded at $159/mt whilst Q1/Q2 FEI traded at $128.5/mt before stepping up to $132/mt. On screen Dec FEI was trading $888/mt to close. The arb was firm this morning with Dec LST/FEI trading at -$342/mt and -$341/mt seeing Euro trade buying interest. Dec FEI/CP was slightly stronger this afternoon. It traded at $254/mt up from opening at $252/mt and up from the low of $249/mt. FEI/MOPJs were slightly up today with -$17/mt up to -$15/mt trading on the Q1 FEI/MOPJ. CP spreads were also firm today up from yesterday’s levels. Dec/Jan CP traded at $15/mt while Feb/Mar traded $18/mt and Jan/Feb traded $12/mt.

The Fed held rates at 3.75% to 4% in a 10-2

Markets enter the week on the back foot following Friday’s broad risk-off move, with equities, commodities and crypto under pressure, although FX remains surprisingly contained.

US Treasuries are broadly unchanged ahead of a pivotal week. Wednesday’s quarterly refunding announcement could deliver the biggest change to issuance guidance since early 2024, while Friday’s NFP is expected to show just 65k jobs, with unemployment steady at 4.2%. Tuesday’s midterms add another layer of event risk, with a potential split Congress historically supportive of Treasuries. Meanwhile, Dallas Fed's Logan believes rates need to be at least 50bp higher to become modestly restrictive.

UK-EU relations are back in focus, with renewed discussion around potential UK re-entry and regulatory alignment. France's fiscal concerns are mounting, with Fitch moving its outlook to negative on weaker growth, higher borrowing costs and a wider deficit.

The BOJ held at 1.25% in a hawkish decision, keeping December as the central case for a 25bp hike. USD/JPY is back near 158.00, with intervention warnings continuing. Australia is firmly in focus ahead of tomorrow's RBA decision, with 32/35 economists expecting a 25bp hike to 4.85% as inflation reaches 4.9% y/y. China delivered mixed signals. RatingDog manufacturing PMI held at 52.0, but official PMI fell to 49.3, back in contraction. Regulatory support helped Chinese equities rebound, while South Korea's KOSPI gained 3.0% on strong exports.

Week Ahead:
Monday: US ISM Manufacturing PMI
Tuesday: US JOLTs Job openings, RBA Interest Rate Decision
Wednesday: US ISM Services PMI
Thursday: BoE Interest Rate Decision
Friday: US Non-Farm Payrolls, US Unemployment Rate, US Michigan Consumer Sentiment
Saturday: China Inflation Rate YoY