Flat-price tumbles as Israel’s response did not include oil infrastructure and focus returns to lacklustre physical market
Commentary summary:
- Risk off is dragging flat price lower, but product cracks are holding firm and physical crude indicators appear to have hit bottom already
- Murban is the latest FOB to correct lower to help support refining, but buying may need to wait until refiners in the East are looking at 2025 buying
- WTI continues to look comparatively expensive into Europe and Asia and although easing freight has started to help, WTI/Brent or MEH diffs need to move to open up exports properly again
Flat price fell further over the weekend, bringing Dated Brent back perilously close to the $70/bbl mark as Israel’s retaliatory strikes in Iran deliberately avoided including oil infrastructure.
Product markets are yet to react, but DFLs remain supported compared to their late-September bottoms and crude markets globally maintain a mild backwardation, signalling that there remains some support even as the risk premium erodes flat price.
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