Good morning, the oil market ended last week on a negative note. ICE Brent settled more than 11.5% lower on Friday, closing at its lowest level since September. The front-month contract plunged below the 100-day moving average and all the way towards the 200-day moving average. Concern over the latest Covid variant and the resulting travel restrictions have weighed heavily on crude oil. A number of countries have imposed restrictions on flights from parts of Southern Africa, while Israel has shut its borders completely. Given that these restrictions will hit air travel the most at the moment, it is no surprise that jet fuel cracks also came under significant pressure. The jet crack in NW Europe traded below US$8/bbl, whilst the jet diff fell by around 25% to US$26/t. Given the lack of information on the latest variant, one could probably question the scale of Friday’s selloff and whether it is really justified. The market seems to be coming to that realization in early morning trading today, with a relief rally underway. Initial reports suggest that symptoms from the Omicron variant are mild, but there are still question marks around how effective current vaccines will be against this latest variant.
The latest Covid developments will make for an interesting week. OPEC+ countries are set to meet on Thursday and there was already uncertainty over what the group may do, following the coordinated SPR release from key consumers last week. However, with the potential demand hit, we believe the group could take a pause in its current supply increases. This would be consistent with the cautious approach OPEC+ has taken since the initial outbreak of Covid-19. The group already agreed at its last meeting to increase output by 400Mbbls/d in December, so any decision made this week will likely be for January production levels. There will be some pre-meetings (Joint Ministerial Monitoring Committee) ahead of the official gathering on Thursday, so expect growing noise between now and then. (ING)
OIL MARKET ROUND-UP: (Bloomberg)
* OPEC+ Likely to Be Cautious on Oil Demand at Meeting, Vitol Says
* Iran Seeks to Return Oil Output to Pre-Trump Sanction Levels
* Biden Says U.S. Gas Prices Will Drop Soon But It’ll Take Time
* Recovery in Asian Fuel Refining Margins Takes a Hit From Omicron
* OPEC+ Moves Technical Meetings for Time to Review Market Rout
* Oil’s Black Friday: Algos and Options Turn a Tumble Into a Crash
* China’s Gasoline, Diesel Exports to Jump M/m in December: JLC
Rotterdam 3.5% INDIC
Dec21 393.00 / 395.00
Jan22 393.00 / 395.00
Feb22 392.75 / 394.75
Mar22 391.75 / 393.75
Apr22 390.50 / 392.50
May22 389.00 / 391.00
Q1-22 392.50 / 394.50
Q2-22 389.00 / 391.00
Q3-22 381.50 / 383.50
Q4-22 371.00 / 374.00
CAL22 383.25 / 386.25
CAL23 361.75 / 369.75
Singapore 380 INDIC
Dec21 412.00 / 414.00
Jan22 411.75 / 413.75
Feb22 411.50 / 413.50
Mar22 410.75 / 412.75
Apr22 410.00 / 412.00
May22 408.25 / 410.25
Q1-22 411.50 / 413.50
Q2-22 408.25 / 410.25
Q3-22 402.00 / 404.00
Q4-22 394.50 / 397.50
CAL22 403.75 / 406.75
CAL23 384.75 / 392.75
Rott VLSFO 0.5% INDIC
Dec21 513.00 / 518.00
Jan22 506.75 / 511.75
Feb22 503.00 / 508.00
Mar22 499.50 / 504.50
Apr22 496.75 / 501.75
May22 494.25 / 499.25
Q1-22 503.00 / 508.00
Q2-22 494.25 / 499.25
Q3-22 486.75 / 492.75
Q4-22 480.75 / 486.75
CAL22 490.75 / 496.75
CAL23 476.25 / 485.25
Singapore VLSFO 0.5% INDIC
Dec21 553.75 / 558.75
Jan22 535.75 / 540.75
Feb22 526.75 / 531.75
Mar22 522.50 / 527.50
Apr22 519.25 / 524.25
May22 516.50 / 521.50
Q1-22 528.25 / 533.25
Q2-22 516.50 / 521.50
Q3-22 509.25 / 515.25
Q4-22 504.00 / 510.00
CAL22 514.25 / 520.25
CAL23 499.00 / 508.00
Sing 10ppm GO INDIC
Dec21 82.55 / 82.69
Jan22 82.20 / 82.40
Feb22 81.87 / 82.07
Mar22 81.58 / 81.78
Apr22 81.31 / 81.51
May22 81.04 / 81.24
Q1-22 81.90 / 82.10
Q2-22 81.04 / 81.24
Q3-22 80.42 / 80.62
Q4-22 79.92 / 80.12
CAL22 80.71 / 81.11
CAL23 78.81 / 79.21
Ice Gasoil Swap
Dec21 624.23 / 626.23
Jan22 623.88 / 625.88
Feb22 622.73 / 624.73
Mar22 620.12 / 622.12
Apr22 617.30 / 619.30
May22 614.55 / 616.55
Q1-22 622.25 / 624.25
Q2-22 614.86 / 616.86
Q3-22 611.71 / 613.71
Q4-22 604.25 / 606.25
CAL22 612.77 / 615.77
CAL23 583.68 / 587.68