Brent Trades Rangebound as CMA CGM Introduces Fuel Surcharge

In the news, CMA CGM will introduce an emergency fuel surcharge from 01 Aug following the renewed escalation in the Strait of Hormuz. The company said the recent rise in hostilities has pushed bunker fuel prices sharply higher, reversing the easing seen in recent weeks and increasing shipping costs across all trade routes. The surcharge will range from $65 to $165 per container and remain in place until further notice. In Iraq, oil minister Basim Mohammed has said that agreements signed with US companies during Prime Minister Ali al-Zaidi's visit to the US are worth around $200bn. The deals are expected to expand oil production capacity and boost investment in associated gas projects. Iraq's current production capacity stands at 4.8mb/d, although plans to increase output remain constrained by OPEC+ production limits despite the country's large crude reserves. In Pakistan, refiners are seeking alternative crude supplies from the US, Nigeria, Central Asia and Singapore as disruptions across both the Strait of Hormuz and the Red Sea threaten Middle Eastern flows. Following a meeting with the country's oil minister, refiners were instructed to urgently secure non-Middle Eastern cargoes, with traders in Singapore also being contacted about crude already loaded and en route outside the region. Finally, at the time of writing, the front-month (Sep/Oct) and 6-month (Sep/Mar’27) Brent futures spreads are at 3.82/bbl and $13.19/bbl, respectively.

This afternoon in Dated remained very volatile with Aug DFL trading between $4.09/bbl and $6.70/bbl on the day. We saw strong buying of 27-31 Jul vs Cal Sep up to $8.30/bbl before we then sold back down. We also saw buying of Aug rolls with 12-18 vs Cal Aug bought at $0.02/bbl and 13-19 Aug vs Cal Aug bought at -$0.22/bbl. In the paper window we saw a major selling 3-7 CFDs at $6.35/bbl. However roll selling then came in post window with selling of Cal Aug 24-28 and Cal aug 21-27.

VLSFO softened this afternoon after the bullish start this morning. Aug/Sep Sing traded down to $45.00/mt while the crack closed the day around $21.40/bbl. Euro 0.5 was also a touch weaker this afternoon, experiencing outright selling, particularly on spreads. Aug/Sep Euro traded down to $29.00/mt while the Euro crack got as low as $.75/bbl.

HSFO also relaxed a touch into the afternoon. Chinese arbers were not very active in the market today. Some selling came in on the 380 E/W combined with an axed seller on the barge crack heading into the window, which resulted in the 380 crack trading down to -$0.70/bbl by EoD. Aug/Sep 380 sold off as a result, trading down to $27.50/mt. As mentioned, the barge crack came under pressure heading into the window, trading down to -$9.00/bbl. Aug/Sep barges saw some selling, closing the afternoon around $8.75/mt.

This afternoon in distillates, Sing gasoil was bid on spreads Sep/Dec with selling Dec/Mar. Selling then came in by tradehouse on the Sep/Nov boxes into the European window. E/W was mixed with Aug selling off into mid-afternoon then finding support at -$29/mt to then rally back up to -$23/mt. Regrade sold off aggressively post morning rally from $2/bbl to -$0.50/bbl in Aug. Q4 was getting hit alongside then firming slightly back up to $6/mt. Kero spreads were mixed with initial selling then scale back buying as ICE gasoil sold off. Prompt ICE gasoil was weak into the afternoon, selling off from $55/mt to $44.50/mt in Aug/Sep. Cracks saw similar flow, dropping $1.6 from highs of $71.20/mt. European jet followed the same path as regrade, rising aggressively in the morning then selling back off in the front to $138/mt in Sep.

Gasoline started the afternoon better bid, with RBBRs getting lifted post US open until a build in US stocks turned the market bearish, and arbs sold off from 27.80c/gal to 26.20c/gal. Aug EBOB cracks came off from highs of $36.50/bbl to $35.30/bbl, but Aug/Sep remained relatively stable around $70.50/mt. E/W continued to strengthen, trading up from -$8.70/bbl to -$7.80/bbl in Aug, with Q4 cracks bid at $15.70/bbl and Aug cracks were trading at $27.80/bbl.

Relatively whippy afternoon in naphtha. Aug naphtha crack comes off from this morning's highs, trading down from $2.10/bbl to $1.70/bbl, where it finds selling in size at $1.75/bbls. Cal'27 naphtha crack gets bought at -$8.05/bbl for decent size pre window but goes better offered during the window, valued -$8.15/bbl with buying in Q1'27 at -$6.75/bbl and -$6.90/bbl from trade. Aug E/W comes off from this morning’s highs down to $69.50/mt, with Sep E/W far better offered, seeing selling step down to $53/mt. E/W boxes quite gappy this afternoon, seeing selling in Sep/Oct box at $9.25/mt with Dec/Jan E/W box getting lifted $4.50/mt.

This afternoon in NGLs, there was continued deferred interest in FEI spreads, seeing Dec/Jan trading at $16.50/t and Q1/Q2'28 getting sold at $38/mt. In the prompt, Sep/Oct was trading at $30/mt, where it eventually settled end window. Aug LST/FEI was trading down to the -$369/mt level, compared to -$365/mt this morning, and the Cal'27 LST/FEI was lifted at -$181/mt, down $4 from last night’s closing level. Some pronap interest today, with Winter getting bought at -$136/mt, and Q1 27 trading at -$127/t. LST spreads had some deferred buying in Q426/Q127 at 5.25c/gal, and in the front, the Aug/Sep/Oct fly was getting sold at flat. Butane opened strong today, with flat price trading up at US open. C4/C3 also trading up, with Q4 26 strengthening from 30c/gal to 31.5c/gal, and Aug trading at 33.5c/gal, compared to 30.75c/gal at yesterday’s close.