Quantum Commodity Intelligence – Crude oil futures in European trading hours Tuesday gave up earlier gains to move into negative territory on the day as disappointing European manufacturing data weighed on sentiment, although profit-taking ahead of key US inventory data was also cited rather than a significant directional shift.
Front-month January ICE Brent futures were trading at $84.49/barrel (1630 GMT), compared to Monday’s settle of $84.71/b, and down from an earlier high of $85.23/b.
At the same time, December NYMEX WTI was trading $83.31/b, versus Monday’s settle of $84.05/b.
Time spreads in both Brent and WTI remained at elevated levels, with the Brent Jan22/Feb22 trading around $1.30/b and the WTI Dec21/Jan22 at around $1.45/b, albeit slightly lower on the day.
Manufacturing activity remained strong in the eurozone in October but dipped lower amid supply chain bottlenecks.
IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) fell to an eight-month low of 58.3 points last month, versus September’s 58.6 points.
OPEC+ is widely expected to stick with the current plan to increase output by 400,000 bpd in December when it meets Thursday, but data suggests that some members of OPEC are already struggling to meet quotas.
The latest Reuters survey suggested the increase in OPEC’s oil output for October fell short of the planned rise, as several countries struggled to raise production.
Reuter said OPEC pumped 27.50 million bpd in October, up 190,000 bpd from the previous month but below the 254,000 bpd increase permitted under the broader OPEC+ supply deal.
The Bloomberg survey found OPEC added only 140,000 bpd last month, primarily because of difficulties faced by Angola and Nigeria.
US President Joe Biden called on countries with spare capacity to step up oil production over the weekend, but analysts say it is increasingly unlikely that OPEC+ will respond.
“Comments made by the two leading countries in the alliance, Saudi Arabia and Russia, indicate that production in December will be increased as planned by 400,000 barrels per day. Another two heavyweights – Iraq and Kuwait – recently expressed the same view,” said Commerzbank.
December TTF natural gas prices on ICE were trading around €67/MWh in late afternoon European time, up 2% from its previous settle but down from Monday’s highs when the contract pushed above €74/MWh on European supply concerns.
In Asian energy markets, benchmark thermal coal prices continued the downtrend Tuesday, with FOB Australia December futures falling around 8% to $139/mt.
Winter LNG prices dropped below $30/mmBtu this week for the first time in more than a month, with JKM futures trading at around $29/mmBtu for December.