Brent remains elevated on Hormuz uncertainty

ICE COT data indicated that money managers rebuilt length aggressively in Brent futures, adding over 40mb (+13%) in long positions over the week as net positions reached 2-month highs. In the news, shipping through the Strait of Hormuz slowed over the weekend following Iranian attacks on tankers, with five commodity vessels transit on Saturday, and one registered for Sunday. ADNOC sold at least 14mb of spot crude to Asian refiners at premiums in its latest tender, trade sources said on Monday. Vietnam received its first direct diesel shipment from India's Reliance Industries refinery via traders in eight years, according to data from shiptrackers and trade sources, after the removal of import taxes for fuels facilitated the trade. Senegal raised fuel prices, with petrol increasing to 990 CFA ($1.75 USD) a litre and diesel to 755 CFA ($1.33 USD) a litre as the government moves to contain the cost of fuel subsidies. Finally, the Oct/Nov’26 and Oct/Apr’27 Brent futures spreads are at $2.11/bbl and $9.51/bbl respectively.

Quiet morning in Dated. We saw some balmo Aug DFL selling at $2.85/bbl and sell side interest in both 7-11 Sep 3-week roll, offered at $1.95/bbl, and 14-18 Sep 2-week, offered at $1.25/bbl. However did see a buyer of 17-21 Aug flat price and buy side interest in 17-21 Aug v Cal Sep as well as 24-28 Aug bid at $0.35/bbl. Also saw 21-25 Sep v Cal Oct bid at $1.8/bbl. Further down the curve saw a major buying Q1'27 DFL up to $1.05/bbl whilst a tradehouse and fund sold. Also saw continued sell side interest in rolls out of 2027 into 2028 from a bank, checking bids on Q3'27 vs Q1'28 and Q3'27 vs Q2'28 DFL.

This morning in Brent/Dubai was very quiet, as we gapped lower, but the trade sellers from last week not chasing bd lower. There was some Fund and refiner buying of Dec B/D, some Chinese selling of Nov B/D, and some buying of Oct ICE vs Sep Dub. The Sep B/D traded $5/bbl down to $4.6/bbl. There was selling of Sep/Oct and Sep/Nov B/D box, buying of the Sep/Oct Dubai spread by trade. The Sep/Oct B/D box continued to move lower, down from -$0.5/bbl to -$0.85/bbl. The quarterlies were very quiet, some bank interest to sell Q2/Q3 box around $0.68/bbl.

High Sulphur complex was somewhat stronger this morning, Chinese arbers were buying 380 flat price early this morning (not in huge size). Sep/Oct 380 consistently traded around $36.75/mt during the window, it was then bid up to $37.75/mt post window. Sep Sing cracks continued last weeks strength and have turned positive for the first time in a while, it traded up from -$0.25/bbl to $0.20/bbl on the back of real buying. Barge cracks were also stronger trading up from -$8.75/bbl to -$8.35/bbl while Sep/Oct is $18.25/mt value yet it has not traded OTC or on screen.

VLSFO continued its trend of opening higher in the early morning before selling back down during and after the window. Sep/Oct Sing traded as high as $40.00/mt pre window before encountering real selling during the window and trading down to $38.50/mt, this selling continued post window with the spread now trading at $37.00/mt on screen. Sep Sing cracks also opened higher this morning at $19.85/bbl it then marginally sold off to $19.70/bbl during the window, however Sep Sing cracks saw real selling post window trading all the way down to $18.90/bbl. 0.5 e/w was implied lower, currently sitting around $77.50/mt. It was a rather quiet morning in Euro 0.5, Sep/Oct Euro traded at $23.50/mt on screen while Sep Euro crack traded at $7.20/bbl during the window.

This morning in distillates, Sing gasoil spreads were offered in the front, with Sep/Oct trading from $6.25 down to $6.05/bbl, while front EW sold off initially to -$70 before finding some support and trading back up to -$69/mt last. Kero spreads continued sell side, with Sep regrade bid at -$2.35/bbl. Prompt ICE gasoil spreads weakened overall, with Sep/Dec trading from $164.5 down to $161/mt, while Oct cracks firmed, up to $72/bbl last.

This morning in gasoline, buying in Sep 92 MOC at flat with EW coming off throughout the morning, seeing Sep trade down from -$11.3 to -$11.7/bbl with some buying in Q1'27 EW at -$/2/bbl. Initially some buying 92 spreads this morning Dec/Jan 92 better bid today – seeing buying up to $1.68/bbl. Selling in Q4 cracks in both regions, with trade selling Q4 92 cracks between $15.35/bbl and $15.2/bbl this morning with selling in Q4 EBOB crack at $18.9/bbl.

Naphtha opened firmer versus Friday, with real MOPJ flat price buying from petchems and MOC better bid, but the strength faded into the window as prompt NWE cracks sold off. Oct cracks softened to around -$0.05/bbl from $0.09/bbl yesterday, while spreads were lighter on limited volume, with Oct/Nov trading at $25.50/mt before the sell-off and Dec/Jan around $15/mt. E/W was stronger, with Sep moving to around $39/mt from $37.75/mt on Friday’s close and Q4 around $40/mt. Backend interest was better bid, while the Sep/Oct box moved down to -$3/mt. NWE naphtha followed the initial firmer open before coming under pressure, with Sep cracks opening around -$3.85/bbl versus -$4.15/bbl on Friday’s close before selling off to -$4.35/bbl. Q1'27 was firm at -$6.80/bbl, while spreads eased with Sep/Oct moving from $25.50/mt to $24.25/mt, Oct/Nov around $23/mt and Dec/Jan around $9.75/mt.

This morning in NGLs, there was some early Chinese FEI flat price buying out of Jan'27 at $625/mt. Sep/Oct FEI opened at $26/mt, before printing $25/mt end window, and Dec/Dec FEI was trading at $93/mt, $3 stronger than last week’s closing level. Q4 LST/FEI traded -$270/mt before softening to -$272/mt end window. The Q1 LSTFEI was sold at -$225/mt, and in the front Sep arb was lifted at -$320/mt and -$319/mt by importers. There was also good sell side interest on the Sep/Oct LST/FEI roll, trading at -$30/mt across the morning. End window on screen, Sep FEI flat price was getting lifted at $693/mt.

Global markets start the week with a softer dollar and modestly richer US Treasuries as benign inflation and weak July retail sales reduce near-term Fed tightening expectations. The Atlanta Fed’s Q3 GDPNow estimate was cut to 4.3% from 5.8%, while July FOMC minutes are the week’s main policy focus.

In the UK, August asking prices for housing on Rightmove fell 2% m/m and 1% y/y, while political pressure is building over bank taxation and labour-market policy.

For China, every major July print landed below consensus. Retail sales grew just 0.6% y/y (consensus 1.5%): big ticket items and property struggled with autos -17.0%, building materials -14.2%, furniture -8.8%, petroleum -7.6%. Small everyday spending held up: comms equipment +20.4%, cosmetics +6.8% and food +5.3%.

Urban unemployment rose to 5.2% from 5.0%, related to seasonal factors. Industrial production decelerated, up 4.5% y/y against the June print of 5.3%. Advanced manufacturing still carries the load (computers & comms +19.1%, shipbuilding +13.6%, special equipment +12.6%). New home prices fell 3.2% y/y, the 37th straight month in decline.

Copper is approaching record territory on tight near-term supply. AUD and NZD are firmer as the US dollar weakens. Risk sentiment in Asia remains broadly constructive.

Data today: Canada inflation, NY Empire State Manufacturing Index.