Brent Holds Above $100 As Chinese Oil Demand Set to Fall

In the news, China's oil demand is expected to fall 600kb/d (8.9%) in 2026, a third straight annual decline, with refining capacity forecast to shrink up to 5.5% from 2026 levels by 2030, according to Sinopec. Gasoline and diesel are set to lead the decline, falling 8.7% and 11.4% to 149Mmt and 164Mmt respectively in 2026, while jet fuel demand rises 1.3% YoY to 41.55Mmt. Chemical industry profits surged over 50% YoY in the first seven months, though apparent demand stays weak, with full-year ethylene-equivalent consumption forecast to contract 8.0% YoY on high costs and inventory headwinds. On refining, the institute cut its 2026 crude processing forecast to 697Mmt, down from its Q2 estimate. Elsewhere, Iraq is pushing for a higher OPEC+ output quota as the group and its allies review member capacity to set next year's production targets, Bloomberg reported. Baghdad reportedly wants OPEC+ to calculate its targets using a baseline of 6mb/d. In Brazil, the government has allocated an additional $1.3Bn for fuel subsidies, according to an executive order President Lula signed today. This is the same day a gasoline subsidy was set to expire. The order earmarks about 5.6Bn reais for diesel subsidies for road use, with the remaining 998Mn reais going toward subsidising fuel production and imports. In other news, Indian refineries have been running at 105-108% capacity utilisation over the past six months, as diesel demand surges and international fuel markets tighten amid the ongoing Middle East crisis. That utilisation range has held steady since the war began, a senior MRPL executive said at the APPEC conference in Singapore. Finally, as of the time of writing, the front-month (Nov/Dec’26) and 6-month (Nov/May’27) Brent futures spreads are at $4.17/bbl and $17.21/bbl, respectively.

Better bid again in Dated, with Balmo DFL breaking through $10/bbl. We saw aggressive buying of prompt structure, with major and trade house buyside of 14-30 Cal Oct at $8/bbl, whilst a bank bought size 11-17 Sep v Cal Oct at $10.70/bbl. The physical continued to move higher another $1-2/bbl, with 21-25 Sep CFD paid at $9.70/bbl and 28-2 Oct CFT lifted at $10.85/bbl at window end.

This afternoon in Brent/Dubai, despite large buying of Nov Brent/Dubai off the back of US tenders, with buying in Dec ICE Brent futures vs Nov Dubai and Nov Dated/Dubai, the selling of Oct, Nov and Dec Brent/Dubai by Chinese overwhelmed. We moved lower, trading down from -$0.50/bbl to -$0.75/bbl in the Oct Brent/Dubai. The Dubai spread traded largely in line with Brent spreads, weakening slightly after the window. The Oct/Nov box was both bid and offered by tradehouse, between -$2.20/bbl to -$2.10/bbl. There was continued bank and producer selling of Q1 and Q2 2027 Brent/Dubai.

In VLSFO, Sing 0.5% was offered this afternoon, Oct/Nov'26 traded down from $36.25/mt to $35.25/mt and Nov/Dec'26 lost 50c while the Oct'26 crack saw real selling from $18.80/bbl down to $18.30/bbl. Euro 0.5% also saw selling this afternoon, spreads were considerably weaker with Oct/Nov'26 selling off from $16.50/mt to $15.00/mt, Oct'26 crack was consistently getting sold on screen from $3.55/bbl down to $2.80/bbl by window close.

In HSFO, Chinese arbers were buying Dec'26 380 flat price and MOC was mixed this afternoon, 380 spreads traded lower with real selling on Oct/Nov'26 from $27.50/mt down to $26.25/mt, Nov/Dec'26 also lost 75c last trading at $19.25/mt. Oct'26 380 crack was somewhat thin this afternoon but still traded down from -$3.35/bbl to -$3.75/bbl. The Barge complex remained stable this afternoon with Oct/Nov'26 trading around $14.00/mt and the Oct'26 Barge crack was range-bound trading between -$11.90/bbl and -$11.80/bbl. 380 E/W has been implied lower from $54.25/mt in the early afternoon to $52.00/mt post window.

This afternoon in distillates, Sing gasoil spreads were quiet, with a Jan/Jun buyer at $18.80/bbl while E/W saw selling across the curve, Q2 trading from -$52/mt down to -$57.50/mt. Kero spreads saw sell side interest in Q1, Feb/Mar trading at $4.80/bbl, while regrade remained quiet.

Prompt ICE gasoil spreads were rangebound overall, with Oct/Nov trading between $68/mt and $73/mt, last at $69.50/mt. Cracks saw strength in the deferred, with Cal 27 trading from $57.30/bbl up to highs of $58.20/bbl. European jet diffs were well bid into Dec, Oct from $90/mt up to $94/mt and Dec up to $115.50/mt.

We had a big selloff in gasoline this afternoon. RBBRs weakened from $29.80/bbl to $26.60/bbl, with front arbs trading around 3.00c/gal. EBOB cracks got offered down from $31.40/bbl to $29.65/bbl, with Q1'27 trading at $21.85/bbl. Spreads also weakened, with Oct/Nov'26 trading down from $75.00/mt to $73.50/mt and crack rolls were better offered down the curve. E/W traded end window at -$6.60/bbl with 92 also trading weaker, as cracks saw selling down to $23.10/bbl and Oct/Nov'26 fell from $8.20/bbl to $8.00/bbl.

This afternoon in naphtha was softer and illiquid, with MOC better offered. NWE naphtha softened versus the morning, with Oct'26 cracks moving from around -$3.85/bbl to -$4.10/bbl, while Q4'26 was around -$4.20/bbl and Q2'27 eased to around -$6.80/bbl; spreads were thin and offered on higher crude, though Balmo traded around $21.00/mt, Dec/Jan'27 held near $19.25/mt. E/W remained supported in the front through the day, with Oct'26 trading up to $64.00/mt before easing back to $63.50/mt post-window, while Nov'26 was around $61.50/mt, Q1'27 firmed to $48.00/mt and Cal'27 moved up to $36.50/mt, though profit-taking appeared at the highs. MOPJ was thin, with backend cracks scale-back offered and flat-price selling leaving Oct'26 implied around $3.00/bbl, while Q2'27 traded around -$2.40/bbl; spreads were mostly illiquid, with Dec/Jan'27 around $25.50/mt and little else trading.

This afternoon in NGLs LST flat price came off on a crude basis with selling across the US curves. Oct LST traded down to 85.625c/gal with spreads initially opening higher before softening with Q4/Q1 trading 2.625c/gal and Q1/Q2 trading 5.875c/gal. The arb firmed slightly on FEI weakness trading up to -$394/mt in Oct and -$282.50/mt in Q1 while FEI flat price traded down $845/mt in Oct. Europe flat price was balanced trading $642/mt end window with the E/W coming off on FEI weakness trading down to $203/mt in Oct. US butane opened strong before coming off with selling in Q4 butane flat price which traded down to 126.75c/gal in Q4 before rebounding with Q1'27 C4/C3 trading 34c/gal.