Brent gapped down on the open on Monday as a chunk of geopolitical risk was removed following a bearish market reaction to Israel’s attack on Iranian military bases. US-backed ceasefires continue to bring some hope, and geopolitical tensions are semi-resigned to the backburner of public attention. Betting sites show Trump’s next presidency at a 65% sure thing, although national polls are pretty tight. With a week until the big day, the US has been focused on establishing who is and is not ‘garbage’. The moral highpoint surrounding Trump’s comedian’s Puerto Rico gaffe dropped like SMCI stocks as Biden had his very own garbage gaffe. Macro releases from the States are pretty murky and seem a step away from the clean, soft landing that was discussed. More polls indicate an even split from ‘analysts’ as to whether OPEC will return the promised/threatened December barrels. The return being in question, let alone out loud, seems far from a good thing.
In crude, the Dated structure was better supported this week. Forties set the curve, which was bid in the front and back. Nov’24 DFL rallied from around -10c/bbl last week to near 45c/bbl. There has been good Chinese selling in Jan’25, and Q2’25 continues to be well offered.
In fuel oil, the rally in HSFO has tapered off with spreads in both regions seeing less buying in weeks previous, and prices came under pressure on lower Brent spreads and deferred crack buying. Sing 0.5 initially weakened on rumours of increased supply out of a Malaysian refinery, but levels returned to previous highs with trade houses buying the dip.
In distillates, ICE gasoil has been extremely resilient with cracks and spreads seeing an upside breakout and breaching technical resistance levels. However, Sing10ppm has outpaced European strength with the East/West rallying above -$10/mt at one point. Jet was even stronger with seasonal demand picking up, with Nov’24 regrade peaking at $2.45/bbl.
In gasoline, a continuation of last week’s gasoline E/W bear play was sold into this week alongside decent 92 spread buying. EBOB, however, has been weak, especially the Nov/Dec’24 spread. RBBRs moved sideways, somewhat supported by a weaker EBOB strengthening TA arbs.
This week, the naphtha market saw early support from MOPJ bids, but sentiment flipped bearish mid-week, with the Nov’24 NWE crack dropping to -$1.85/bbl on 30 Oct. In the East, the naphtha E/W spread initially rose, reaching $23.25/mt on 25 Oct, before declining to $19.25/mt by 31 Oct as the window saw less support and around Diwali.
In NGLs, US propane stocks saw consecutive weekly draws, driving up LST and narrowing the prompt C3 LST vs. C3 FEI arb to nearly -$200/mt, though weaker exports might temper further upside. In Asia, FEI propane weakened as spreads softened, alongside a strong settlement in Saudi propane. The front-month C3 CP settled today at $635/mt amid solid demand and bullish sentiment, which pressured Dec’24 FEI/CP to around $10/mt.
