The Officials

Markets were falling with the mood all sappy during IE week but then Mr. T decided to spice it up but issuing another sanction, this time to Venezuela. If I’m you think there is a free market, think again. Between Mr. T threatening or missing sanctions or tariffs and OPEC desperately selling a story of demand growth and tight production trading has been reduced to guessing what the next blabber will be. We noticed this morning that Chevron disappeared from the Dubai window and soon it will have to disappear from Venezuela too as the orange storm comes to Venezuela. About a quarter of exports currently end up in the US. After weeks under review, Trump announced yesterday he will revoke the permit Biden awarded to Chevron to operate in the country in November 2022. From bringing in upwards of 600 kb/d in 2018 and January 2019, US imports of Venezuelan crude collapsed to 0 between July 2019 and January 2023. Trump argued on social media that Venezuela failed to take back migrants from the US – ask Colombia how that went for them…

Murban futures volumes have exploded in February and the Murban premium is flying ever higher! Read more page 2… A key theme of IE week has been to be a good boy or lady about OPEC quota compliance. There is a lot of pressure to publish or come up with analysis that paints a compliant bullish story. We were shocked about the widespread nature of the pressure tactics, the big names under the cosh and the consequences people have been threatened with. “I was there when XY called XX and said what we should publish,” said an employee at one of the companies. The chromosomal markers may help you solve the riddle. There have been calls, emails and direct pressure on media, consultants, ship trackers, and even government organizations! One of our sources said, regarding an international organization; wink, wink, “I was in a recent meeting (like really recently) where they were calling the entity all kinds of names.” My source was in the Middle East recently, and if you are in the oil circles you know where.

We’ve seen pancakes with bigger bumps than flat price today. Following yesterday’s collapse, Brent seemed to want a day to reset and allow some meetings to go ahead unperturbed by major market crashes or bounces. Maybe it went too far and actually ended the European session exactly where it was yesterday, at $72.83/bbl!

The North Sea window was almost as quiet as Dubai today. Only Mercuria rolled in to offer. Hey, if you buy a full VLCC’s worth of Midland in one window, you’ve got to offload it somehow… The offer of a 10-14 March at Dated +$1 didn’t attract any interest from lethargic buyers busy planning their next IE week outings.

Following yesterday’s slaughter, Brent flat price held steady in the low-$73 range through Asian trading. It closed at $73.34/bbl. Post-window it dipped below $73 again. Meanwhile, in Dubai the silence is deafening. Sellers have really gone MIA. Or maybe the imbibement disabled them. Only Unipec turned up at all really today, making only minimal efforts to offer. But at least the Chinese turned up. Chevron and Reliance have really disappeared into the dust. The buyers laid siege to the sellers’ castle and there was nobody home to defend it. The bid/offer spread was a gaping chasm as no seller made any significant effort. By the window’s close, the best bid came from Vitol at $76.05, while Unipec’s best offer came to $76.45. If you ever wanted a visualisation of how cagey the trading was, voilà!

Chaos reigns! While everyone was busy mingling at IE week, everything dumped! And we mean…everything! Oil, equities, Bitcoin, US Treasury yields… they all got a pounding. Even gold dumped 2%, turning back from its exceptional uptrend, as hedge funds closed even winning positions. Time to offset some losses? Red everywhere! All across different assets, the longs got massacred. The only thing making gains today seemed to be the VIX volatility index, up almost 5.5%! Weak US consumer confidence and tariff anxieties have been mixed into a potent cocktail.

As of the week ending 21 February, volumes for key exchange traded futures contracts saw broad-based declines on a week-on-week basis. Only M2 gasoil futures increased at all, edging up just over 1%. At least until today, there’s been some calm in the markets, as participants got some respite after January’s madness.

The Dubai market went to sleep! All the traders could not be bothered to pull up their depleted guns, and those in London preferred to nurse their heads wondering: ‘why did I do it again! Don’t I know it hurts in the morning? 🥴 Not a single trade! The Dubai window players clearly had enough of convergence central that we saw in yesterday’s session. Sellers Chevron and Reliance completed some convergences yesterday, clocking a grand total of 3 cargoes! But today both had disappeared into the night, as if they’d been abducted by aliens. There wasn’t even a whisper of either the Americans or the Indians in this morning’s window. The only one who showed up to offer was Unipec and even they only put in a half-hearted attempt. And so there was not a single trade ☹. Bidders were far more numerous, with BP and Vitol leading the charge. They raised bids repeatedly but Unipec’s offers remained elusively high. And when they did close the gap, neither side wanted to budge from their final entry, putting Dubai at $77.795. Sometimes naughty traders spot an opportunity and come up with interesting bids or offers, sort of when the cat is away, the mice come out and play!

The day is upon us. The Officials are delighted to offer the latest addition to the Benchmark Publication – our very own Dated Brent assessment. Today Dated Brent was assessed at $74.60/bbl. In the physical, the window was soft… again… The flow of Midland continues unabating. Mercuria, Exxon, BP and Unipec were all trying to flog the stuff. After persistent lowering from Mercuria, Petroineos snapped up a ripe CIF midland at Dated plus $0.80 for 8-12 March. Cepsa also lifted Exxon for a 18-22 March Midland at Dated plus $1. Mercuria was offering Forties, at -10c, but no one showed interest.

Markets opened International Energy Week well down, still suffering with Friday’s hangover, as key participants prepare for a frantic week of conferences and boozy meetings in London But in Dubai it’s finally convergence o’clock!! On the 16th trading day of February, Chevron declared a cargo to PetroChina. We only had to wait until the final week of the month to get one, quite a change in pace from the prior few months. But you wait for a bus and three turn up at the same time. As well as Chevron’s convergence with PetroChina, Reliance declared an Upper Zakum to PetroChina and another of the same grade to Vitol.

The market jumped and dumped. From over $77 yesterday afternoon, flat price declined steadily early today throughout Asian trading and made it to lunchtime in London just above $76. And then Team America slam dunked it. Brent collapsed to below $75 and just about clawed its way above to close at $75.01/bbl! $75 has been a sticky level in recent weeks, so how well can flat price hold on this time?

The familiar faces of the regulars turned up again for another cortège in the Dubai window – Vitol and PetroChina kept on buying from the usual sellers, Reliance and Chevron. But there’s a new boy in town. Shell waltzed in and lifted a Chevron offer, the first time we’ve seen them in a while – but just one trade for now. Again, there were a few other bidders there or thereabouts, but the likes of Trafi and BP kept their bids below the market. Yet, we’ve reached the end of the third week of February and we’ve still not seen one single convergence in Dubai. Nobody wants to dive in and seize the market – don’t worry, guys, Totsa are all off skiing, they’re not going to massacre you again.

The Trump/Musk team want to audit Fort Knox to see if the gold reserves are really there. We’re waiting for the details on the visit while also wondering if Musk could come to London and audit the aptly named Loco London gold market. You see, we’ve been hearing about gold delivery problems in London while watching the price skyrocket towards the $3,000/troy ounce level. Maybe there is gold and maybe there isn’t. But one of delivery points, the mighty Bank of England is not delivery the gold speedily. Conspiracy theorists say there isn’t enough to cover all the obligations, while some people we know say only 15 employees are authorised to handle extraction from deep underground vaults using a rickety old lift.

The same players came out for some more fun in Dubai today. Chevron resumed its offering, though was less interested in hitting bids. That role was taken up by Reliance, which hit both Vitol and PetroChina with aplomb. Others were hanging out in the window but kept their distance from the action: Exxon’s bids were low, while Shenghong’s offers were high, so neither got stuck into the meat of the matter. Indeed, it’s still rather quiet, with only 4 trades today and STILL no convergence! We’re getting withdrawal symptoms after Totsa’s antics in the previous three months. What can we say, we miss them!

Brent fancied a run up the hill. It climbed and danced its way up throughout the morning, like the longs making the most of the rally, from the early Asian session right through to after lunchtime here in London, but it stalled and fell back slightly to the European close. By the end of the window, it had slid back down to $76.43/bbl, almost 40c down from its peak. It’s getting chilly out there in the US, so keep an eye on production shut ins – with North Dakota already expecting at least a 150 kb/d reduction. But Brent kept falling post-window, down below $76 by 18:00 GMT.

Who knew? Talking can resolve conflicts. The Russians said talks with the US had gone well and they had covered a wide array of issues. Rubio said the end of the Ukraine war must be acceptable to all – but does he just mean those who are present in Riyadh? As the wordsmiths and silver-tongued diplomats got busy charming and schmoozing, Brent cooled from its peak over $76 to fall back towards $75, soothed by Lavrov’s revelation there should be some moratorium on attacks on energy facilities in the conflict – too late for Kazakhstan . An afternoon recovery saw Brent close at $75.62/bbl.