The Officials

Volumes continue to be up on the week but down on a yearly basis!

The end of a big month for the oil market and The Officials! We were very curious what the feeling would be at the big APPEC gathering in Singapore. The narrative there was decidedly bearish. Ooh, the sky is falling, the consultants and the EIA and IEA are saying there is a glut! Bearish supply and demand balances, blah, blah, blah…‘The Super Glut,’ as some called it. That was on the Monday before the Israeli bombardments of Qatar on Tuesday, and also while Mercuria was making some bearish moves on the Dubai benchmark and Vitol the opposite.

The glass ceiling of $70 is unbreachable! It would take firing a real rocket, Tomahawk maybe 🤣, up Brent’s backside to get above that point, as we remain stuck in the $65-70/bbl range, now dropping to $2.91/bbl by the European close. That’s down almost 3 bucks from Friday’s Europe close – welcome to the pain cave! Nov EFPs even dropped into pricing negatively this afternoon ahead of expiry, to the surprise of an experienced trader who couldn’t recall having seen that before.

The oil market was walloped! By mid-morning London time, Brent was down near $69 following its earlier tryst with 70 bucks. But $70 is the ceiling, remember? We have been telling you that unless something big and fundamental changes, the market will bounce between $65-70/bbl. At the moment we are still in the upper band but signals from Asia are that the Chinese are not so keen to load up at $70/bbl, they are flat price sensitive after all.

$70! Brent made the leap and broke the barrier just after 15:00 BST. But the prompt spread struggled to keep up with that surge, oscillating gently in the mid-80c range. The market spouted great horns this morning. It stretched upwards in the window to hit the close at $70.68/bbl! Although it’s fat bear week in Alaska, any bears in the oil market have been fleeced and look rather malnourished as the bulls run rampant this week.

The big news this month: the prompt Dated/Dubai swap has flipped back to positive territory for the first time since mid-August. We were wondering yesterday who let the bulls out in the North Sea; those same bulls wanted to keep a low profile in the Dubai window and decided it was time for Dated’s comeback. The October Dated/Dubai swap was trading as high as 15c in the early trading before partially retracing to 2c by the Asian close – that still a hefty 33c higher than yesterday! One trader was getting excited about his flies too, the Oct/Nov/Dec Dubai fly dumped from 75c on Monday to 35c yesterday!

If you thought yesterday was chaos in the North Sea, today’s bonanza shoot the physical to the moon!

From Raging Bull yesterday to Sitting Bull today, as Brent cooled its heels and found support just over $69. It was against Dubai that Brent really showed off, as the October Brent/Dubai swap went on an adventure this morning, surging from -$1.70 in the early trading hours to -$1.41 by the Asian close, and peaking at -$1.30 shortly after! Brent was doing the heavy lifting while Dubai was chilling.

Wow, what a crazy session in the North Sea, the title gives some of the juice away!

What a wacky window! Or wacky players…buyers were avoiding certain sellers like the plague. And sellers avoiding buyers. Somebody please bring some order to the nonsense! Unless our eyes and ears deceive us, NPI was happily bidding at $69.89, but the sellers Mercuria and Reliance gave them the cold shoulder, entering their own offers below that and hitting lower bids from the likes of Vitol. A study in careful avoidance. Market crosses or wide bid/offers are the death of markets. But hey, the liquidity in Dubai is enormous, with players telling us that the Oct/Nov Dubai spread had a record yesterday.

Dollar debasement is the name of the game, seemingly, for this administration. Self-sabotaging policy has driven markets into deep disillusion with the global reserve currency, seeing an increasing rotation to gold. Spot gold is up over 42% to almost $3.8k/oz today! In dollar terms, oil is down from around $80/bbl at the start of 2015 to the upper $60s range today. But, in gold terms, the fall has been dizzying…

Global volumes are down on the week and on the year folks!

Flat price is stirring up again! Brent and other key benchmarks have been on a slight downtrend as various entities write and comment about excess supplies. Some were wondering if the Brent flat price could hit $65/bbl. But we were on the bullish camp thinking $70 is more likely than $65. And the price is almost smack in the middle, near $67.25/bbl at press time. It has been a very narrow trading range for days as traders fight their battles on differentials, like will the Dubai premium bounce up from the near two dollar range and go back up to three? Will Vitol or Mercuria get crushed on Dubai, first one is long and second is short.

The buyside remains on the sidelines in the North Sea while the physical differential continues rising through the rolling up of the contango structure.

The Officials Brent Index is in!
The Indonesian regulatory authorities, as per the attached document, have approved the Jakarta Futures Exchange’s request to launch a futures rolling contract settling on The Officials Brent Index (OBI). The contract is designed to serve the needs of both professionals trading large lot sizes as well as smaller investors trading smaller lots. The contract reflects a rolling contract which rolls on the day before the normal expiration of the Brent contract. The contract is launched on 1st of October, 2025.
Please see the official attachment in Bahasa Indonesia, but dear reader, a translation to your own language is now super easy on the web.