Brent on its way to weekly gains on geopolitical risk

The Sep'26 Brent futures contract reached a high of $76.84/bbl around 12:30 SGT (5:30 BST) before softening to a low of $75.35/bbl at 16:10 SGT (09:10 BST). Prices remained choppy thereafter but ultimately reached $76.18/bbl at 17:47 SGT (10:47 BST - time of writing). Oil prices are on-track for a weekly gain, with the M1 Brent futures contract beginning the week at $71.54/bbl. In the news, India's Oil and Natural Gas Corp. (ONGC) will reportedly build a 1.75 million mt (13 mb) SPR in Mangalore in Southern India, as per a stock exchange filing on 09 Jul (Thursday). India currently allows commercial use of a part of its ​strategic storage built at three locations, Mangalore, Padur and Vizag, to ​store up to 5.33 million mt of crude. ONGC has yet to provide a plan for the cost and time of completion for the new planned SPR facility. Meanwhile, motorists in Indonesia are modifying their cars to run on biodiesel to avoid paying high oil costs. This comes following Indonesia's accelerated testing of fuel under its B50 mandate, a blend of 50% palm-based diesel and 50% conventional diesel, leveraging Indonesia's position as the world's largest palm oil producer and exporter. The EU is also planning to introduce policies and funding schemes to shift more of its economy from oil and gas to electricity, as per Reuters, in a draft plan that is due to release on 17 July. Since late February, ⁠the war in Iran has added €50 billion ($57.11 billion) to the EU's oil and gas import bill, according to EU ​data. Greek PM Kyriakos Mitsotakis has also announced a deal with oil refineries, who agreed to cut fuel prices by "10 cents per litre and diesel fuel will drop by 5 cents per litre," until the end of August. Finally, at the time of writing, the Sep/Oct'26 and Sep/Mar'27 Brent futures spreads stand at $0.09/bbl and $1.82/bbl, respectively.

Quiet morning in Dated Brent, with some screen selling continuing on Aug'26 DFL down to -$0.01/bbl (around -$0.10 DTL) and Sing selling OTC. We saw selling of 24-28 Aug vs Sep ICE which market makers lifted in size at -$0.10/bbl. In the front, we saw a refiner buying 13-17 Jul vs Cal Aug at -$0.921/bbl whilst the 13-17  Jul two-week roll traded at -$0.70/bbl. Further down the curve, we saw some continued sell side interest in Q1'27 DFL from a major and selling of Cal'27 DFL.

Overall, a quiet day in Dubai. There was buying interest in Aug and Sep Brent/Dubai on screen early on, which pushed us up 50c to $4.75-4.85/bbl. As the window unravelled, we met more sellers of Brent/Dubai and a buyer of Dubai spreads, which pushed us back down to $4.50/bbl. Overall very low volumes OTC.

A strong start to the last day of the week on VLSFO. Sing spreads were initially better offered however going into the window cracks and spreads went better bid, supported by aggressive buying on Sing 0.5 flat price in the window. The Sing crack traded up to $16.10/bbl while Aug/Sep Sing finished the morning around $25.00/mt. Euro 0.5 was implied higher off the back of Sing with Aug Euro crack closing the morning around $6.45/bbl while Aug/Sep Euro traded down a touch to $19.75/mt.

Likewise on HSFO, buying characterised the market this morning. 380 spreads were better bid off the bat off the back of 380 E/W finding some support. Aug/Sep 380 broke through the $2.50/mt level where it has been trading the last couple days to close the morning at $3.75/mt. 380 cracks benefitted from E/W buying with Aug 380 crack trading up to -$5.00/bbl. As mentioned Aug 380 E/W saw some buying this morning trading up to $19.25/mt. Barge cracks were also stronger trading up to -$8.15/bbl while Aug/Sep barges traded up a touch to $4.25/mt.

This morning in distillates, Sing gasoil spreads were well bid in Aug/Nov by trade, Sep/Oct trading from $4.00/bbl up to $4.10/bbl. The gasoil E/W was well supported in the front, trading from -$70/mt up to -$67/mt, lifted post window. Regrade remained bid in Aug, while kero spreads were sell side, with Sep/Oct at $2.85/bbl.

Prompt ICE gasoil spreads weakened into the window before firming, Sep/Dec trading from $105.00/mt down to $101.00/mt, before moving back up to $104.50/mt while cracks sold off to $54.00/bbl in Sep. Both heating oil spreads and HOGOs firmed, Aug HOGO swap trading from 30.50c/gal up to 31.80c/gal.

Gasoline opened a lot weaker this morning with RBBRs coming off around 2 dollars overnight. 92 cracks traded at $15/bbl first thing before rallying to $16.20/bbl as RBBRs recovered. Spreads also went better bid with Aug/Sep trading up from $2.30/bbl to $2.80/bbl. The gasoline E/W opened higher at -$15.25/bbl and was stable around that level. EBOB strengthened from $30.40/bbl to $31.10/bbl where it found some selling from refiners. Spreads were also better bid with Aug/Sep trading up from $55/mt to $55.75/mt.

This morning in Naphtha, mixed interest in MOPJ MOC with Sep getting lifted +5c with Aug MOC slightly better offered. The naphtha E/W saw more selling this morning, with the Aug E/W trading down to $40/mt, with prompt boxes coming off aggressively, seeing Aug/Sep EW box getting hit at -$0.75/mt. E/W found a floor around the $39/mt handles which spurred Europe cracks to sell off, with the Aug Nap crack trading down from -$2.05/bbl this morning to -$2.7/bbl at the end of the window.

This morning in NGLs, a quiet start to the day with some early FEI flat price buying in Aug at $619/mt. LST/FEI interest at the front of the curve, with Oct trading at -$214.50/mt and the cross Aug/Sep lifted at $221/mt. FEI flat price weakened across the day and the arb strengthened as a result, seeing Aug LST/FEI close the morning at -$232/mt, having traded down at -$238/mt prior. Sep/Dec CP traded at $1 before strengthening to $4/mt at the close, and Aug/Sep CP settled at $22/mt having closed yesterday at $19/mt. FEI spreads came off slightly, as Aug/Sep traded down from $14.50/mt to $13.50/mt end window. On screen, Aug FEI flat price was lifted to $613/mt at the end of the window.

This morning in the macro, the yen strengthened past 161.5/USD, erasing the week's losses that reached 40-year lows. The market is on alert for official intervention, data due later this month will reveal whether the MoF was behind recent sharp, short-lived rallies. Katayama added fuel by saying the government will encourage domestic pension funds to buy Japanese financial assets, which knocked the 10yr JGB yield 10bp lower to 2.77% (off near three-decade highs).

Japan also saw June producer prices hit 7.1% y/y (vs 6.8% expected and 6.6% prior). Unsurprisingly petroleum & coal surged to 22.8% (from 13.7%) on Iran war supply disruptions, with chemicals also at 14.4%. The silver lining is growth m/m has slowed to 0.4%, the softest in four months.

Global equities staged a comeback, led by a resurgent AI trade. In the US the S&P 500 rose 0.8% and the Nasdaq 1.3%. Micron gained 5.2%, Sandisk 7.6%, and Meta jumped 4% after announcing its own AI chip targeting September production.

Over in Europe the Euro STOXX 50 added 1.2% as ASML and Infineon each climbed over 4% while UniCredit rose 2.6% on the increasing likelihood of a Commerzbank takeover. The rally carried into Friday's Asian session as the Nikkei climbed 1.2% to 68,558 for a second straight gain, with SoftBank the standout at +10.7%.

In China the Shenzhen added 1.2% also behind semiconductor names like GigaDevice (+5.9%). On the data front, Chinese June CPI came in soft at 1.0% y/y (vs 1.2% consensus) with the m/m print at -0.3%. However, PPI came in hot at 4.1% vs 3.9% expected. This comes ahead of a heavy Chinese data week featuring Q2 GDP, trade, industrial production, and retail sales.

Over in the US, housing activity is cooling. Existing home sales fell 2.4% m/m to 4.09 mil annualised (vs 4.20m expected), with the South (-3.6%) and Midwest (-3.0%) dragging. Prices still rose 1.8% y/y to $440,600 making it the biggest annual gain in over a year. Meanwhile, the dollar index slid toward 100.5, a third straight daily loss, as US-Iran peace talk reports reduced safe-haven demand. However, markets still price at least one Fed hike this year. Regarding the Fed itself, NY Fed's Williams flagged AI-driven demand as his top inflation concern, while Chair Warsh unveiled five task forces to review the central bank's approach to policymaking, hinting the framework itself may be in play.