Brent stabilises and trades around $108/bbl

Russia is extending restrictions on diesel exports until the end of October. Equinor’s Bacalhau oilfield off the coast of Brazil is now producing at a volume near its 220kb/d capacity, CEO Anders Opedal told an energy conference in Oslo. According to JLC, gasoline and diesel inventories from China’s SOE’s have declined amid a tightening domestic market, with the former falling to the lowest since 2022, while the latter fell to a 15-month low. The cost of shipping US crude to Asia has surged to a fresh record, costing around $44.8 million to hire a VLCC from the USGC to China. Treasury Secretary Scott Bessent said on Tuesday he’ll meet this weekend with his Chinese counterpart, He Lifeng, ahead of the Trump-Xi summit set for 24 Sep in Washington. Finally, the Nov/Dec’26 and Nov/May’27 Brent futures spreads are at $5.14/bbl and $20.46/bbl respectively.

Better offered this morning in dated with Oct DFL opening lower with screen selling and selling of bal sep oct dtd down to $13.75/bbl. We saw strong selling of 21-2 Oct DBL down to $16.65/bbl and selling of Bal Sep vs 5-16 Oct at $11.35/bbl. Chinese were also offering 28-2 Oct 3-week down and 21-25 Sep v Cal Oct was offered at $13.65/bbl, however was a buyer of 21-25 Sep 3w. Further down the curve we saw some sell side interest in Q1'27 DFL and good size selling of Q4'27 DFL at $0.75/bbl from a British major.

This morning in Brent/Dubai we traded higher, with there being interest by major to sell Dubai spreads. Oct through Dec dubai spreads were well offered, and they moved down both around $0.5/bbl. This saw the Oct Brent/Dubai rally from -$2.15/bbl to -$1.53/bbl, with trade and refiner buying. There was some trade interest to sell Dec and Jan B/D as we rallied, but at the same time there was bank buyside in Q1 and Q2 B/D. This meant that apart from the Oct/Nov box which rallied from -$2.7/bbl to -$2.2/bbl, boxes were only mildly up down the curve.

380 complex came under sell side pressure this morning, 380 spreads continued to show resilience pre window with Oct/Nov trading around $38.50/mt, however real selling came in during the window, and it sold down to $37.75/mt this pressure continued post window as it traded down to $36.25/mt. Oct 380 crack showed similar resilience trading around -$1.85/bbl pre window, real selling pushed it down to -$2.30/bbl by window end and it has slipped to -$2.50/bbl post window. Barge spreads were stable this morning, Oct/Nov traded between $16.50/mt and $16.75/mt while Oct crack strengthened this morning getting bid up from -$14.00/bbl to $-$13.70/bbl. 380 E/W therefore shed around $3.50/mt to $71.50/mt.

Sing 0.5 spreads were better bid this morning, Oct/Nov initially traded up from $46.50/mt to $48.25/mt before briefly selling down to $47.75/mt where it found support and rebounded to $48.75/mt during the window, Nov/Dec traded slightly higher from $38.50/mt to $39.00/mt. Oct 380 crack saw high volume traded on screen but there was no real axe in the market, it initially traded up from $22.70/bbl to $23.00/bbl by window end and then was offered back down to $22.70/bbl post window. Euro spread liquidity was very thin this morning, the front two spreads have yet to trade while Oct Euro crack traded down from $1.95/bbl to $1.80/bbl post window.

This morning in distillates, Sing gasoil spreads were bid initially in the front, with Oct/Nov trading up to $11.4/bbl before selling down to $11.05/bbl last. EW was well bid at -$70/mt, while Q2 saw selling at -$61/mt. Kero spreads were well offered into Jan, while front regrade sold off initially, hit from -$4.5/bbl down to lows of -$5/bbl before recovering to -$4.6/bbl last. Prompt ICE gasoil spreads weakened, with Oct/Nov trading from $90 down to $85.5/mt, while Nov cracks rallied to $90.0/bbl.

This morning the east opened strong, with cracks trading up to highs of $29.60/bbl before weakening to $28.80/bbl post window as RBBR’s came off. There was good buying on spreads from refiners and a major, Oct/Nov was bid up to $11.50/bbl before coming off to $11.30/bbl. EW firmed from -$7/bbl to -$6.50/bbl in Oct and there was good buying in Q1 and Q2 E/W at -$5.30/bbl and -$10.50/bbl respectively. EBOB cracks opened higher at $36.30/bbl but eased to $35.50/bbl with Oct/Nov trading down from $108/mt to $106/mt.

This morning in naphtha was choppy, with MOC better offered, spreads softly bid before turning offered, while front cracks stayed weak and most moves remained crude-dependent. MOPJ was noisy, with front spreads mixed but supported by some major buying, as Oct/Nov moved from around $32.50/mt to $33/mt, Oct/Dec traded at $66.50/mt and Q2/Q3 at $44.50/mt; cracks were softer versus last night, with Oct around $1.10/bbl before selling down towards $0.70/bbl equivalent on flat-price selling from Chinese sellers/petchems, while Q1 traded flat and Q2 around -$2.70/bbl. E/W was bid in the front but faded from the highs, with Oct moving up to $64.50/mt before easing back to $63.50/mt, Q1 up to $49/mt before coming back to $48.25/mt, Oct/Nov around $2/mt and Oct/Q1 at $15.25/mt. NWE naphtha was weak on front cracks but more active in rolls and spreads, with Oct down from -$5.85/bbl to -$6.30/bbl, Q1 easing from -$5.20/bbl to -$5.30/bbl, Q4/Q1 around -$.1/bbl, Q1/Q2 at $1.75/bbl and Q2/Q3 at $0.85/bbl; spreads were bid at times but shaky with crude and limited offers, as Oct/Nov moved from $31/mt to $31.50/mt before returning to $31/mt, Nov/Dec held around $32/mt, Dec/Jan softened from $22/mt to $21.25/mt and Oct/Q1 was around $109/mt.

This morning in NGLs was weaker after some initial Chinese FEI flat price buying out of Nov at $850/mt. Spreads were trading down and the Arb found some strength. Oct/Nov FEI sold down to $37.5/mt having opened the day at $40/t, and Nov/Dec was also weaker closing the morning trading at $35/mt down from $37/mt. Also had deferred spread interest with Dec/Mar lifted at $102/mt, and Jan/Feb was trading at $32.5/mt. Oct LST/FEI initially traded lower down to -$439/mt, but strengthened across the morning to close the morning trading at -$428/mt, softening slightly into close. Q1 LST/FEI also with interest both side, trading at -$315/mt and -$314/mt, similar to last night’s closing level. Q1 FEI/MOPJ buying at -$51/mt where it eventually closed the morning. End window on screen, Oct FEI flat price was lifted at $879/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.