Oil – EnergyScan

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…

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…

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…

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…

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…

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…

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…

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…

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…

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…

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…

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…

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,…

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.…

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…

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…

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. …

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…

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,…

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…

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…

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…

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…

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…

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…

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…

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…

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…

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…

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…

September 10, 2021

China taps into its reserves to counter rising prices

The price of crude oil continues to be quite volatile without finding a real trend: yesterday it exceeded $73/b before dipping below $71/b and then rising to $72/b. Prices took a temporary dip after China announced that it had drawn (for the first time) on its strategic reserves to calm the price…

September 9, 2021

Price rebound. US stocks expected to fall

The price of Brent crude oil is back near its recent highs, just below $73/bbl. It is supported by the even slower than expected return of production (only 20%) in the Gulf of Mexico after the damage caused by Hurricane Ida. The prompt timespread has risen to 80 cents/b from 60 cents/b a few…

September 8, 2021

No clear trend in crude oil prices

After approaching $73/b yesterday, the price of Brent 1st-nearby fell sharply to $71.11/b, but is already back above $72/b. In short, the market seems to be without a clear direction, due to the many uncertainties surrounding it regarding the duration of the unavailability of supply and refining capacity in the southern US, the…

September 7, 2021

Brent price nears $73/b

Crude oil prices hit a low yesterday ($71.51/bbl for Brent) after Saudi Arabia cut the price of its exports to Asian customers. Then, they recovered in a context still marked by the damage inflicted by Hurricane Ida on the oil complex in the Gulf of Mexico: 80% of the region’s…

September 6, 2021

Crude prices down after US jobs report and lower Saudi crude prices for Asian customers

Crude oil prices continue to fall this morning: Brent 1st-nearby has lost around $2/bbl ($71.65) since the release of the US jobs report on Friday, highlighting economic slowdown and wage pressures. The sharp decline in Saudi crude prices to Asian customers has again highlighted the impact of the Delta variant on demand levels…

September 3, 2021

Longer-term hurricane impacts emerge

The BSEE reported that as of yesterday that the total outages in the Gulf of Mexico remained at 1.7 mb/d, which was revised higher from the day before when the bureau estimated outages at only 1.4 mb/d. This shows that impacts on production are still not fully understood. In the wake…

September 2, 2021

OPEC+ does not deviate from its path

Yesterday’s OPEC meeting was uneventful, as the group briefly met, to extend the current production policy of a 400 kb/d group-wide production increase in October. The impact of Ida, combined with lost Mexican production, removed a substantial volume of sour crudes, especially needed for US refineries. With the Biden administration’s latest…

September 1, 2021

US production could be limited for weeks

November ICE Brent futures became the front-month contract, with prices back above 72 $/b on early Wednesday. The API survey, released yesterday, reports a 4 mb draw in crude oil inventories, while gasoline inventories grew by 2.7 mb. The EIA data release, expected today, will have little impact on the market, as volatility…

August 31, 2021

Offline refining capacity outpaces production losses

WTI and ICE Brent futures were slightly up from Monday’ session at 73.3 $/b. Outages in the US refining sector outpaced crude production shut-ins, following Ida’s impact. Indeed, estimates range from 2 to 2.5 mb/d of offline refining capacity in the Louisiana state. On the other side of the market,…

August 30, 2021

Ida’s aftermath

The oil market was focused on the Ida hurricane making landfall yesterday, strengthening to a Category 4 hurricane with winds reaching 240 km/h in key areas of the US petroleum complex (especially the Port Fourchon and LOOP complexes in Louisiana, delivering 17% of US crude supply) and knocking out power supply across…

August 27, 2021

Hurricane rally

Crude prices jumped, with Brent October contract reaching 72 $/b, as the Ida hurricane threat became clearer. Ida is expected to reach oil infrastructures by Sunday, passing through the Gulf of Mexico’s main offshore fields and landing in Lake Charles and Baton Rouge, where significant refining capacity is (Exxonmobil, Citigo…

August 26, 2021

Rally in Atlantic gasoline markets

Crude prices remained supported to 71.8 $/b for ICE Brent prompt futures. As the EIA weekly release showed a seasonally average week, with stock draws in crude and products of about 5 mb (see report). Another drop in gasoline stocks, combined with emerging hurricane threats and some unplanned outages in Gulf Coast refiners,…

August 25, 2021

Peak delta

ICE Brent front-month contract rallied back to 71 $/b yesterday, with the Oct/Nov time spread climbing a high as 75 cents, from 40 cents the day prior. We believe the front-month contract’s fair value remains close to 70 $/b, given the dollar strength and how time spreads rallied strongly from…

August 24, 2021

Sovereign hedge unwind?

Crude prices rapidly recovered from last week’s slumpy yesterday, with ICE Brent front-month contract rallying by more than 5%, to reach 69.3 $/b on early Tuesday. More interestingly, the whole curve rallied, with longer-dated time spreads such as Dec-21/Dec-22 gaining as much as 60 cents intraday, from 3.2 $/b. Indeed,…

July 30, 2021

Weak INE crude expiry in China

Crude oil prices in Europe and the US continued to climb, to reach 76 $/b for the ICE Brent September contract. On the opposite of the spectrum, INE crude, Shanghai’s medium sour crude future expired for September’s contract at a significantly lower level than previous trading sessions, likely to reflect the…

July 29, 2021

America outperforms

Crude prices continued to rise yesterday, to reach 75 $/b for the ICE Brent August contract on the backend of drawing US petroleum inventories and supportive macro environment for inflation. In their latest EIA data release, commercial crude stocks drew by 4.1 mb, in line with seasonal norms. Gasoline and distillate stocks both…

July 28, 2021

Record driving season ?

Crude prices were unevenly boosted by a constructive data release from the American Petroleum Institute, as ICE Brent prompt month reached 74.8 $/b on early Wednesday. Conversely, WTI prices rose at a slower pace, pushing the WTI-Brent to levels unseen since June, at 2.7 $/b for the November contract. We maintain…

July 27, 2021

Self-supplying East

Crude prices regained the lost ground of last week, with ICE Brent September contract at 74.6 $/b. India plans to further commercialize its SPR, in an effort to free some of its idle crude oil reserves, and to promote market-driven storage, in a time where backwardation incentivize commercial players to release stocks.…

July 26, 2021

Bonds vs risky assets

ICE Brent September contract traded at 73.3 $/b on early Monday, on a backdrop of declining US bond yields, depressing the price of risky assets such as Asian equities and commodity prices. On Friday, we learned more about last Monday’ sell-off which shaved 7% off on most oil futures after regaining slowly their…

July 23, 2021

As if nothing happened

Brent prompt prices are back to their level of the start of the week: above $73/b. The sharp downward correction on concerns over the Delta variant ($67.44/b was touched on Tuesday) has been entirely erased, as risky assets in general posted a strong recovery and the oil market acknowledged it would…

Oil market news