EnergyScan

Oil market news

ES-oil
November 26, 2021

Outright crude crashes

By falling below 80 $/b, ICE Brent front-month future declined by close to 4.5% within a day. Yet, front-month time spreads remained supported, at 127 cents. The decline in US bond yields and Asian equity markets likely impacted crude prices. Global financial markets remain worried about the rise of a potential new…
ES-oil
November 25, 2021

Japanese oil-to-gas switch remains elusive

Crude prices remained elevated, at 82.2 $/b for ICE Brent front-month price, despite the SPR release announcement and a relatively neutral EIA weekly snapshot. Total crude inventories declined (accounting for the SPR release of last week) while distillate stocks declined further, likely due to a slower than anticipated ramp-up in US…
ES-oil
November 24, 2021

Release the barrels !

The US finally announced the release of 50 mb of crude oil into the market, coordinated with Japan, South Korea, the UK and China. ICE Brent crude rallied strongly, and snapped back to 82 $/b at the front, while font time spreads rallied to 100 cents. In total, the volumes released globally…
ES-oil
November 23, 2021

SPR day ?

Details of a potential US SPR release are emerging, with the announcement expected today. First, it is likely that the announcement will concern multiple countries. We expect China and Japan to respond positively to the US demands. Secondly, there could be between 30 and 60 mb of crude delivered to…
ES-oil
November 22, 2021

Collapse at the prompt

The possibility of a coordinated SPR release is seriously denting the sentiment and upside risk in crude oil futures markets. Japan is now considering seriously an SPR release, while China confirmed that it was already destocking its strategic stocks. The US also released stocks last week, but these releases were part…
ES-oil
November 19, 2021

Diesel sails West

Coordinated SPR releases continue to be the hot topic for crude markets, with China expected to release light sweet crude stocks, in line with the destocking that occurred over the year. Now, China can easily score points with Washington by following the US guidelines. It is likely that China continues to…
ES-oil
November 18, 2021

Time spreads discount SPR release risk

Crude prices weakened, to reach 79.4 $/b for ICE Brent January contracts, as Biden tried to convince other countries to release crude from their domestic SPR. Front-month time spreads remained relatively supported, close to 100 cents, which means that the market is not materially concerned by these. Indeed, Japan already declined the…
ES-oil
November 17, 2021

Stocks dynamics remains mysterious

Global crude stocks are the subject of interest for many market participants lately. Sattelite imagery providers are reporting steep draws since November, especially Kayrros. On the other side, more conventional surveying techniques such as the API survey reports stock builds in the US (0.6 mb last week for crude). The IEA also released…
ES-oil
November 16, 2021

Nigerian crude demand remains elusive

Crude prices continued to hover around the 82 $/b for ICE Brent Jan delivery, amid falling diesel cracks in Europe and the US. Indeed, refining margins have weakened to flip into contango at the prompt for Europe and Asia, as diesel prices softened, fuel oil prices dropped heavily, while gasoline and…
ES-oil
November 15, 2021

SPR release in the void ?

Crude prices remained pressured, sticking to the 80-82 $/b range, as the possibility of a US SPR release limited prompt tightness. With such growing political pressure and uncertainty, money managers continued to cut their exposure to major futures markets (Brent, WTI). The Brent open interest from financial players declined by…
ES-oil
November 10, 2021

Confliciting messages

Yesterday’s Short Term Energy Outlook published by the EIA showed a relatively balanced global oil market, with stock builds in H1 22, which was a key report for the US administration to decide whether an SPR release was needed. While the STEO was relatively underwhelming, the API survey showed another…
ES-oil
November 9, 2021

Summarising Biden’s toolbox

Crude prices remained stable, hovering around 83.5 $/b for the January ICE Brent contract. Expectations of a response from the US administration raised uncertainty in the crude oil market, as Biden’s toolbox for limiting the current price rally could be disruptive for sections of the market. If Biden decided to release stocks…
ES-oil
November 8, 2021

Saudis hike their OSP capture the Asian refining profit margin

Crude prices continued to be supported, at 83.5 $/b on early Monday, as the OPEC saga ended on Friday with Saudi official selling prices being disclosed for the month of December. Surprisingly, The Saudis hiked crude differentials to Asia by 1.4 $/b against the Oman/Dubai average, one of the highest…
ES-oil
November 5, 2021

OPEC+ maintains its output policy

Without material surprises, OPEC+ countries maintained their production policy unchanged yesterday, with 0.4 mb/d monthly production increases considered to be sufficient to respond to a market that will soon be oversupplied in Q1, according to demand estimates and seasonality. Furthermore, OPEC+ members insisted that their decisions could not be challenged…
ES-oil
November 4, 2021

OPEC day

Today, the OPEC ministerial meeting will be held in Vienna. We expect OPEC members to stick to their production policy and increase targeted group-wide production by 0.4 mb/d. While the political pressure is mounting for Saudi Arabia – the historical partner of the US in the Middle East – there are good reasons…
ES-oil
November 3, 2021

Diverging inventories?

Crude markets remained supported, ahead of the OPEC+ meeting, despite inventory builds reported by the API survey. Indeed, crude inventories grew by 3.6 mb, while Cushing stocks were seen down by 0.8 mb, explaining why WTI’s backwardation remained elevated compared to the ICE Brent backwardation. On a global scale, total inventories…
ES-oil
November 2, 2021

Pressure on OPEC+

Whether its market prices or threats from oil-consuming countries, OPEC+ is warmly invited to increase production by more than the 0.4 mb/d monthly hike planned for December. Indeed, front-month time spreads in Brent, WTI and Dubai markets all rallied substantially last week, with Dec21/Jan22 WTI at 150 cents, while Jan/Feb 22 Brent hovered around…
ES-oil
October 28, 2021

Energy-sector correction

Font-month prices in the crude and refined product market dropped sizably, with Dec-21 ICE Brent dropping from 85 $/b to 82 $/b before rebounding on early Thursday. The two drivers likely to explain the correction are diesel cracks continued weakening since Monday and falling US demand reported by the EIA. For diesel…
ES-oil
October 27, 2021

Cushing draws surprise

Crude prices remained supported throughout yesterday, despite builds reported by the API survey in the US. Indeed, crude stocks grew by 2.3 mb, while refined products stocks expanded by 1.5 mb. Interestingly, Cushing continued to draw at a fast pace, 3.7 mb, partly explaining the elevated volatility on WTI time…
ES-oil
October 26, 2021

Triple digits fuel prices emerge

Gasoline prices spiked yesterday in Asia, with Singapore’s benchmark 92 RON cracks reaching 17.8 $/b in the spot window (103.7 $/b in total on a FOB Singapore basis) and November cracks above 12 $/b. Strong bids were formulated by trading houses, likely trying to respond to Indian gasoline tenders. Indeed, India is…
ES-oil
October 25, 2021

Time spread jump

Crude prices hiked on early Monday, with ICE Brent reaching 86.1 $/b. The most surprising move came late Friday when ICE Brent forward curve steepened, with the Dec/Jan inter month spread reaching 93 cents, previously hovering around 70 cents. Dec-21/Dec-22 also jumped, to reach an impressive 9.73 $/b, rarely experienced that…
ES-oil
October 22, 2021

Asian weakness in fuel oil markets

Crude prices corrected, with ICE Brent Dec21 contracts back to 84.3 $/b, as diesel cracks in Europe weakened momentarily, due to a 1.3 mb diesel build in the ARA region. Stocks remained below seasonal averages, with 16.3 mb of inventories. Furthermore, long-range weather forecasts in the US and Europe were revised warmer…
ES-oil
October 21, 2021

Diesel carries the most upside risk

ICE Brent crude futures continued to be supported, at 85.2 $/b for the Dec21 delivery, as stocks data in the US and the ARA region surprised to the downside. Indeed, US stocks were depleted by a combined 11 mb, mainly due to drops in gasoline and diesel stocks, as the US turnaround…
ES-oil
October 20, 2021

WTI, the next leg up ?

The ICE Brent Dec-21 contract is consolidating at the 85 $/b, at odds with the rally in US equity markets, which usually boosts commodity prices. Indeed, the recent report on positioning showed that money-managers were diverting exposure from the Brent market – 31k of reduced long exposure on the Brent instrument – to the WTI…
ES-oil
October 19, 2021

Chinese new quotas impacts physical markets

China’s 4th and last batch of crude imports is impacting far east crude grades, as ESPO cargoes traded 6$ above the Dubai benchmark yesterday for December loading. It is likely that most ESPO loadings will sail to China, as independent refiners are looking for light sweet distillate rich grades that require…
ES-oil
October 18, 2021

Gasoline prices spark political reactions across continents

Crude prices continued to rally, at 85.7 $/b at the prompt for ICE Brent Dec-21 contract, as Asian nations multiplied calls to oil producers to boost production, as gasoline pump prices soared in the East. Indeed, The Japanese prime minister urged oil producers globally to ramp up production over the…
ES-oil
October 15, 2021

Chinese import quotas maintain pressure on independent refiners.

Crude markets continued to creep higher, with ICE Brent Dec21 contracts trading at 84.8 $/b on early Friday. Despite a poor EIA weekly report, with crude inventory builds of 6 mb, and refinery maintenance work denting throughput by 650 kb/d w/w, crude prices and time spreads continued to rise globally. There…
ES-oil
October 14, 2021

Diesel deficit growing in the Atlantic basin

According to the API industry survey, US crude stocks built by 5.2 mb w/w, while Cushing stocks dropped by 2.2 mb, lending support to the greater availability of crude in PADD3 and the Atlantic basin. Indeed, crude stocks are expected to build slightly in the US for the month of…
ES-oil
October 13, 2021

China’s energy crisis in focus

Crude prices remained supported, with ICE Brent futures above 83 $/b for the Dec-21 delivery. The energy crisis in China is likely to prompt further imports from domestic refiners to rely increasingly on locally sourced energy consumption from refinery units through LPG burn, as Chinese coal futures are soaring markedly above last…
ES-oil
October 12, 2021

Oil-to-gas switching still not materialising

Crude prices remained supported by the rest of the commodity complex, with the White House urging OPEC+ nations to increase their output. Since last Friday, the US crude market witnessed heightened volatility, as the prompt WTI time spread spiked from 60 cents to 110 cents intraday, without clear fundamental drivers, which…
ES-oil
October 11, 2021

Electric spillovers

Futures crude markets continued to rise on early Monday, with WTI crude prompt prices nearing 81 $/b at the prompt while ICE Brent futures climbed at 83.8 $/b, amid deepening energy crises in India and China. Indeed, rolling blackouts are now implemented across most Indian provinces to curb coal consumption amid ultra-low…
ES-oil
October 8, 2021

The White house starts to worry about fuel price inflation

Crude prices remained volatile on Tuesday, as sources close to the White House mentioned that an SPR release of potentially 60 mb was considered, while also mentioning that reinstating the crude oil export ban was a possibility. The White House backed-tracked later in the day, which boosted crude prices, with ICE Brent…
ES-oil
October 7, 2021

Diesel supply and demand shocks

Diesel cracks are soaring globally, which may indicate that there is stronger demand, partly due to oil-to-gas switch and a recovery in aviation demand that reduces diesel supply. Yet, the strength in cracks, the main profitability indicator for refining economics in Europe, are now almost exclusively driven by natural gas prices,…
ES-oil
October 6, 2021

Loose physical crude markets

Crude prices rallied yesterday, with front-month ICE Brent futures reaching 83 $/b, as natural gas prices soared in Europe and Asia, putting pressure on diesel and fuel oil winter markets. Yet, US and Japanese inventories increased across the board, with notable builds in US gasoline inventories, according to the API.…
ES-oil
October 5, 2021

OPEC+ maintains its production policy for November

Crude prices rallied yesterday, as OPEC+ members met to decide their forward production policy for November. Dec-21 ICE Brent contract reached 81.6 $/b on early Tuesday. Interestingly, Brent-Dubai EFS, denoting the competitivity of Dubai-denominated grades against Atlantic basin grades, rallied to 4.38 $/b, which has likely been a concern for…
ES-oil
October 4, 2021

OPEC day

ICE Brent Dec-21 contracts continued to be supported ahead of the OPEC+ meeting, as refined product markets signalled strong demand for middle distillates and fuel oil. Global prices across the complex are healthy levels for crude and refined products. Indeed, Refiners’ margins are boosted by diesel cracks being back to pre-pandemic levels…
ES-oil
October 1, 2021

Uncertainty from OPEC+

Despite a rather weak expiry, expectations of demand were boosted on the December 2021 ICE Brent contract by comments from the Chinese government starting to acknowledge the depth of the energy crisis in China. Energy supplies must now be secured at all costs according to the energy and industrial sector supervisor. …
ES-oil
September 30, 2021

Crude prices supported despite a weak EIA report

Crude futures remained supported, at 78.5 $/b, despite rapidly falling time spreads, with front-month ICE Brent time spread now valued at 50 cents, from 80 cents prior in the month. The move was likely due to the rather disappointing EIA data release, where stocks were built by 10 mb in…
ES-oil
September 29, 2021

Correction amid rising US stocks

Crude futures corrected, as signs of weakness multiplied across markets, as we mentioned yesterday. ICE Brent November contract fell from 80*/b to 77.7 $/b on early Wednesday, as time spreads started to correct as soon as Monday, amid rather loose fundamentals. Indeed, the API survey depicted a grim outlook for US inventories,…
ES-oil
September 28, 2021

Overheated

As crude prices continued to rally, with ICE Brent crude prices reaching 80 $/b at the prompt, we are starting to see signs that the physical market and prompt pricing are diverging from longer-dated futures. Indeed, ICE Brent prompt time spread weakened to 79 cents yesterday, at odds with the flat…
ES-oil
September 27, 2021

Unwind week ahead of OPEC+ meeting?

Crude markets continued to be boosted by winter demand expectations, as the ICE Brent November contract reached 79 $/b. The commitment of traders report showed that money-managers increased their net long position by 20 thousand lots, in line with the rally in Dec21/Dec22 spreads, now valued at 7.4 $/b, while…
ES-oil
September 24, 2021

Macro optimism boosts the front of the curve

ICE Brent futures were boosted late in the previous session (reaching 77.4 $/b on early Friday) by a jump in inflation expectations, which led to a sharp rally in US treasury yields and equity markets. Indeed, 10-years Treasury yields reached 1.44%, a 13 basis point jump in the span of hours. Buying…
ES-oil
September 23, 2021

Crude draws continue to support the oil complex

ICE Brent crude prices continued to rise, reaching, 76.4 $/b on early Thursday, amid drawing inventories in the US and despite a rise of the US dollar, in light of the Fed’s increasingly hawkish stance during yesterday’s FOMC announcements. Indeed, fed members are now evenly split between 1 and 2 interest…
ES-oil
September 22, 2021

US crude draws continue

Crude markets continued to be partially bid up with ICE Brent November contract reaching 75.4 $/b. The industrial survey published by the API reported another sizable crude draw of 6.1 mb in the US, while gasoline and distillate stocks respectively declined by 0.4 mb and 2.7 mb. The long-lasting impact of Ida…
ES-oil
September 21, 2021

US crude supply revised down due to structural damage

ICE Brent crude prices edged higher today, expanding by 1.2%, after a volatile downward move yesterday, likely due to the continued selling pressure in global equity markets due to the fallout of the Chinese promoter Evergrande and a rally of the dollar. Yet, with Shell’s announcement that one section of their platform…
ES-oil
September 20, 2021

Spreads carrying the oil complex

Crude prices corrected in the early morning, likely due to spillover effects of an Asian equity selloff, amid concerns over the Chinese housing market. Indeed, the dollar index, tracking a basket of currencies against the dollar, rose markedly on late Friday and remains elevated compared to previous months. For the crude markets, two factors…
ES-oil
September 17, 2021

Gasoil cracks continue to boost crude prices

Crude prices remained firm yesterday, at 75.4 $/b for ICE Brent font-month contract, as gasoil cracks continued to sharply increase in Europe and Asia. The low sulfur gasoil cracks forward curve in Europe rose above 10 $/b during the last trading session, boosted by a recovery of European economic activity, as…
ES-oil
September 16, 2021

US stock draws pushes crude prices higher

Crude prices climbed above 75 $/b at the prompt for ICE Brent futures, as the EIA reported a surprise stock draw of 6.4 mb when most market observers were expecting builds, as there was a possibility that refiners in Louisiana could take longer than expected to ramp-up output. Crude production…
ES-oil
September 15, 2021

Chinese SPR crude auction, amid falling US inventories

Crude prices remained firm, above 74 $/b for the ICE Brent November contract. The Chinese Food and Strategic Reserve Administration will release 7.3 mb of crude on September the 24th, amid falling commercial inventories in China, which prompted Chinese officials to utilize their strategic reserve in a more proactive manner to limit…
ES-oil
September 14, 2021

Longer-dated refining margins rallying ahead of the winter

Crude oil prices climbed higher to 74 $/b for ICE Brent front-month contract ahead of the Nicolas weather event, reclassified as a hurricane in the last hours, ahead of its landfall. Large refineries in the Houston area announced that they would maintain normal operations. The impact of such a hurricane will likely…

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