Brent over $100 on renewed US-Iran fighting risk

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.

It was a quiet morning in Fuel, Sing 0.5 opened stronger on the back of eastern buying with Dec/Jan trading up from $31.50/mt to $36.00/mt, Dec Sing crack was also better bid trading up from $17.60/bbl to $18.70/bbl by window end and then to $19.40/bbl post window, Dec 0.5 E/W is yet to trade but has been implied $13.00/mt higher to $112.00/mt. Euro 0.5 complex is yet to trade due to the early Singapore window.

380 saw slightly more volume and was also better bid due to eastern buying; Dec/Jan opened $2.00/mt higher at $27.00/mt and was then bid up to $28.00/mt in the window; the buy-side interest has since subsided, and it has traded down to $27.50/mt, Jan/Feb traded up $1.50/mt to $19.00/mt. Dec 380 crack saw buying into the window, getting bid up on screen from -$2.20/bbl to -$1.50/bbl, Dec 380 E/W has traded $7.00/mt higher to $77.00/mt. The barge complex is yet to trade.

This morning in 92, MOC was bid. We saw 92 cracks open higher at $12.20/bbl and trade up to highs of $12.60/bbl on poor liquidity, with Q1 valued at $14/bbl. Spreads were scaleback offered by trade houses, with Dec/Jan trading up to $1.80/bbl and Dec E/W traded at -$1/bbl.

This morning in naphtha, MOC was strongly bid, with MOPJ and E/W strengthening while NWE remained thin. MOPJ Dec cracks rose from $3.20/bbl to $3.50/bbl versus around $3/bbl last night, while backend cracks were illiquid but priced higher on Q1 E/W buying and propane strength across the curve. Spreads stayed bid despite lower crude through the window, with Dec/Jan up from $29.50/mt last night to $32/mt and Jan/Feb from $29/mt to $31/mt. E/W strengthened in the front and Q1, with Dec up from $63.50/mt at close to $66/mt and Q1 from $53.50/mt to $56/mt, while Q1/Q2 traded at $12/mt post-window versus $11.25/mt last night. NWE cracks were thin outside a few large offers, with Dec improving from -$4.10/bbl to -$3.95/bbl and Q1 trading at -$4.90/bbl; spreads remained illiquid but priced up in line with MOPJ.

This mornio $75.5/bbl.

This mornio $75.5/bbl.

This morning in NGLs, the FEI structure was very well bid, although spread liquidity was poor. Dec/Jan FEI was traded at $61/mt pre-open and then $59/mt and $60/mt, whilst FEI flat price in Dec rallied aggressively in the window, trading from $938/mt before the end of the window up to $945/t on screen to close. Then gained $1 more, up to $946/mt. Dec/Jan CP traded at $16/mt, up $1/mt from yesterday morning's traded levels of $15/mt. Arb and other diffs were illiquid. Dec E/W traded at $184/mt for small size, up $2/mt from yesterday’s implied closing level.

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