Dated Brent, Europe's physical oil benchmark, jumped above $120 per barrel even as ICE Brent futures slipped toward $101. The split, which emerged amid an extremely volatile week of trading, suggests the physical oil market is tighter than the futures price lets on.
Dated Brent, which should technically underpin ICE Brent's moves, jumped above $120 a barrel this week even as the futures contract slipped to $101. The divergence suggests physical crude oil supply is tighter than the paper market implies.
A European diesel stock release, drone strikes on tankers in the Strait of Hormuz, and Beijing reinstating its refined product export ban all played their part in the week's volatile trading, yet the physical market kept climbing even as ICE Brent eased. Meanwhile, OPEC+ is expected to keep November output targets unchanged at Sunday's meeting, with core producers still pumping 5 million barrels a day below pre-war levels, despite August production rising 630,000 barrels a day month over month to 25 million barrels a day.
EU governments are mulling the release of 50 million barrels, about 17% of the bloc's emergency diesel inventories, over 20 days, after US President Donald Trump threatened a diesel export ban. Final volumes are yet to be confirmed. Beijing, meanwhile, has suspended most October refined product export shipments, reinstating its prior export ban, with diesel stocks around 20 million barrels below pre-war levels and gasoline 9 million barrels short of target.
The US Department of Energy also offered the last tranche of Trump's 172-million-barrel emergency drawdown, putting 40 million barrels of sour crude up for November-December delivery and taking the total release to 243 million barrels once delivered.
Source: Oilprice.com
Trading involves risk.
Risk Disclaimer
