It was a historic week for the US as someone had to change Grover Cleveland’s Wikipedia from ‘only’ to ‘first’. Landslide results, comparable to 1964, point to a similarly anxious America, with Google searches for ‘WW3’ up 15% in the week and worryingly, searches for ‘who is running for president’ seeing a 200% weekly increase. LBJ’s 1964 “We must love each other, or we must die” may be too sentimental and ‘nineteen sixties’ for Trump 2.0, but “I’m going to stop wars” and “let’s stop killing people”, but it inspires some hope that the geopolitical risk volatilities may lessen. The market has a few months of processing time to check the effects of tariffs, regulations, sanctions, and drill baby drill, but the initial market reaction has been a bit measured.
The possible sanctions on Venezuela and Iran, and the potential relief from the Russian sanctions have been the supply conversation points. Still, we’re talking long-term here, and the immediate impact on the flat price was quickly reversed by some offshore drilling evacuation. There are a few months to prepare before the official handover for Nancy Pelosi to clean out her portfolio of anything green whilst the Dems figure out who to point the finger at.
In crude, the Dated Brent physical reversed on 6 Nov which contributed to a volatility breakout in structure. The Bal-Nov DFL gapped down to $0.10/bbl. This weakness dragged down back-end structure which spurred buy-side hedging flows in the 2-to-3-week rolls, possibly for West African cargos. Given the sudden selling intensity, we think this is a localised weakness and does not indicate broader bearish fundamentals.
In fuel oil, HSFO weakened with Dec’24 Euro cracks down to -$9.90/bbl pressuring spreads down the curve. 380 E/W rose to $10.00/mt but was capped at $9.00/mt due to selling. 180 was firmer with Dec ’24 Visco reaching $13.25/mt, though Balmo selling added pressure. Early strength saw Dec/Jan’25 Sing 0.5% reach $9.75/mt. Later, Dec Sing cracks dropped to $11.90/bbl, and Dec/Mar ’25 to $18.25/mt. Europe held firmer but still followed Singapore lower, with the 0.5% E/W narrowing to $47.00/mt in Dec ’24 and consistent selling in 2025 quarters.
In distillates, prompt ICE Gasoil crack peaked at $17.15/bbl, settling at $16.25/bbl, pressured by a 2.9mb US distillate build. Singapore gasoil softened, with the Bal-Nov/Dec spread narrowing to $0.75/bbl. European jet demand stayed rangebound, while HOGOs weakened on low US winter demand, expected to rise with holiday travel.
In gasoline, RBOB has been the star of the show, with a well-bid RBBR supporting the entire gasoline complex. There was a failed bear play in the East, which led to a short squeeze. EBOB has been weak in the front, but supported in the deferred amid back-end arb selling after the US elections.
This week, the naphtha market saw rising bearishness amid consistent selling of the Dec/Feb’25 MOPJ spread from trade houses and majors amid weakening cash in the NWE and MOPJ window. The E/W is still bid, and NWE naphtha has seen selling, with only Q2’25 gasnaph selling supporting it.
In NGLs, the strength in US propane was driven by a bullish stats reading and stronger exports, in line with a narrowing LST/FEI. CP and NWE are currently the strongest performing international propane benchmarks, with the former driven by robust demand and the latter by supply tightness concerns with US exports mainly directed towards Asia.
