Brent recovers to $108

Prices remain below yesterday’s highs of nearly $110/bbl, which marks a firm resistance level. In the news, Ukraine struck an oil refinery in the Russian city of Syzran, President Volodymyr Zelenskyy said on Tuesday. The Syzran refinery is part of Rosneft, with an annual processing capacity of 8.9 million tonnes of crude oil. According to China’s National Bureau of Statistics, China processed 13.91mb/d of crude in August, +11.2% m/m but -6.9% y/y. Yuan-priced crude futures in China rallied to the highest level on record, up to as much as 929.4 yuan ($138.50)/bbl on the Shanghai INE. Nigeria's Dangote 700kb/d Lekki refinery launched its IPO earlier today to partly finance its expansion to 1.4mb/d, offering 4.1bn shares at 525 naira/share (40¢/share). ExxonMobil has shut its 264kb/d Joliet, Illinois refinery after a power outage occurred on Sunday, the company said on Monday. Carlyle is backing Avenrock Energy’s C$1bn acquisition of Parallax, adding around20 kb/d of light oil/NGL production in Alberta’s Duvernay and marking its second major Canadian oil investment in a year as investor interest in Canadian energy assets strengthens.

Opened stronger again in Dated with Oct DFL trading up to $10.00/bbl and Oct Nov DFL up to $3.92/bbl, having sold off post-window last night. We saw a market maker selling 19-23 Oct 1-week low at $1.7/bbl and 16-18 Sep vs 23-25 Sep trading $3.65/bbl. 5-9 Oct v Cal Oct was also bid at $4.9/bbl and 12-16 Oct 2-week offered at $5.7/bbl by refiner. Further down the curve we saw 2-way flow on Q1'27 DFL with $3.25/bbl trading and some buying in the back of the curve with Sep-Dec 27 DFL buying.

This morning in Brent/Dubai we gapped lower, and saw selling by trade house of Jan, Feb and Q1 2027 Brent/Dubai into MOC. We traded down from -$2.2/bbl to -$2.4/bbl in the Oct Brent/Dubai, but made lows at MOC and proceeded to rally after this. The Oct Brent/Dubai reversed its move lower, trading up to -$2.15/bbl, with the Oct/Nov spread slightly weaker and all boxes trading up. There was selling of all the boxes by trade house this morning into MOC, but following the move lower with this flow gone the boxes rebounded higher. There was also product selling of Q2 and Q3'27 Brent/Dubai, the strip trading $1.54/bbl.

380 spreads were better bid in the early morning, Oct/Nov saw consistent buyside interest from $37.75/mt up to $39.50/mt, it traded between $39.00/mt and $39.50/mt during the window, however the interest turned sell side post window getting offered down on screen to $37.50/mt where it found some support. Oct 380 crack had similar price action initially trading up from -$1.60/bbl to -$1.30//bbl before on screen selling pushed it down to -$2.25/bbl. Barge spreads saw little interest, Oct/Nov traded at $14.00/mt, while Oct Barge crack opened lower at -$14.40/bbl and shed a further 30c to $14.70/bbl post window. 380 e/w has traded between $80.00/mt and $81.00/mt.

This morning, Sing 0.5 spreads saw decent volume and were initially driven up through buyside interest before selling back down to opening levels. Oct/Nov encountered real buying getting bid up from $48.00/mt to $51.00/mt pre window but sold down to $50.00/mt by window end and shed another dollar to $49.00/mt post window. Oct Sing crack was aggressively bid up on screen from $22.50/bbl to $23.25/bbl before selling back down to $22.70/bbl where it traded during the window. Euro 0.5 spreads lacked buy or sell side interest this morning, Oct/Nov traded around $16.50/mt while the Oct Euro crack traded down from $1.90/bbl to $1.30/bbl.

This morning gasoline was weaker. Cracks opened higher in the East and traded up to $28.70/bbl before getting sold down to $27.80/bbl, with Q4 trading at $21.80/bbl. Spreads also had refiners on the sell-side as Oct/Nov came off from $11.30/bbl to $10.60/bbl. EW rallied form -$7/bbl to -$6.60/bbl as EBOB weakened. Cracks were well offered down from $36/bbl to $33.60/bbl and front spreads also saw better sellside interest, with Oct/Nov coming off from $107/mt to $99/mt.

This morning in naphtha was weaker and choppy versus last night, with MOC initially better bid but the tone fading into the window as front E/W gapped lower and cracks/spreads came under pressure. MOPJ opened supported, with Oct cracks bid up to $2.10/bbl before coming off sharply to around $1.40/bbl post-window, with flat price trading implying closer to $1/bbl; backend flat-price buying from petchems kept Q1 around $795/mt, Q3 at $674/mt and Q4'26 at $888/mt, while spreads were bid early before flipping offered, with Oct/Nov dropping from $36/mt to $33/mt and Nov/Dec easing from $35.50/mt to $34.25/mt. E/W was softer versus last night, with Oct gapping down from around $65/mt to $60/mt before finding support at the lows and recovering to $61/mt, while the Nov/Dec box was around $1.50/mt and Cal'28 traded near $23/mt. NWE naphtha was weak and illiquid, with Oct cracks opening around -$4.90/bbl and being offered down to -$5.80/bbl, while spreads priced lower on thin liquidity, with Oct/Nov around $31/mt, Nov/Dec at $32.50/mt, Oct/Q1 at $114/mt and Nov/Jan at $55.50/mt.

This morning in NGLs, there was some early FEI flat price selling from Chinese out of Oct and Nov at $879/mt and $839/t respectively. FEI was stronger again today and spreads were trading slightly above yesterday’s closing levels. Oct/Nov FEI bid up to $41.5/mt from $39/mt, and Nov/Dec was trading at $38.5/mt end window having opened the day at $36.5/mt. Oct LSTFEI opened the day trading at -$436/mt, but weakened down to -$441/mt end window on the back of strong FEI. FEICP was also better bid, seeing Nov trade up to $245/mt before softening slightly to close the morning at $242/mt. CP spreads also up on the day, with Oct/Nov trading up to $38/mt from $36/mt, and the Oct/Nov/Dec fly was sold at $24/mt. Scaleback selling of deferred FEI/MOPJs, seeing Q4 trade at both -$44/mt and -$40/mt, closing the morning at the latter. End window phys bid appeared to be hit but reality was an offer was lifted, and that caused a brief sell off in FEI flat price and spreads, with arb turning better bid, but rallied back slightly after news was rectified. On screen, Oct FEI flat price was getting hit at $894/mt.

Correlation between the 10Y and oil is the highest since the GFC.

German & Dutch gas storage levels look dangerously low heading towards winter.

The Dutch central bank moved 86 tonnes of gold out of New York and Ottawa to London. More than 1/4 of everything they held in North America between March and August, announced today. New York went from 31.3% of their reserves to 18.5%. London went from 18.1% to 32.1%. Stated reason is “increasing geopolitical unrest” and crisis readiness.

Short interest in the median S&P 500 stock is up to 3.2% of market cap, the highest level since 2009. This is now approaching the 2008 Financial Crisis peak of ~3.8%. By comparison, during the 2022 bear market, this percentage was ~1.7%. Furthermore, short interest among the most heavily shorted 10% of S&P 500 stocks is up to 8.0% of market cap, the highest in 8 years. Even during the 2000 Dot-Com Bubble burst, short interest never surged to these levels. The short trade is starting to look overcrowded.

Snowflake stock, surges over +22% after reporting stronger than expected earnings due to AI demand.