After such a sleepy period from October to December, the crude market has come alive.
That’s what Chris Weston, Head of Research at Pepperstone, said in a market analysis sent to Rigzone on Monday, highlighting that the buyers are “now in firm control of the tape, with Brent futures pushing through the 200-day moving average”.
“Supply is the key near-term driver, with Biden’s fresh sanctions on Russia’s two main oil producers and Russian tankers further complicating the logistical challenges Russia now faces,” Weston added in the analysis.
“With the cold snap already adding momentum to the buying in crude, married with the recent draw in inventories, the would-be sellers have simply moved aside, a factor in the order books which has resulted in the buyers moving price higher with increasing ease,” he continued.
“The fact that we’re seeing both the Brent and WTI futures curve moving deeper into backwardation is also a key development, as those holding long positions are further incentivized to hold for the increased carry that is on offer,” Weston went on to state.
Weston also pointed out in the market analysis that “higher levels in crude seem probable”.
In a Skandinaviska Enskilda Banken AB (SEB) report sent to Rigzone by the SEB team today, Bjarne Schieldrop, chief commodities analyst at the company, noted that Brent “made a big jump on Friday to an intraday high of $80.75 per barrel and a close of $79.76 per barrel, and a gain over the week Friday to Friday of 4.25 percent”.
Schieldrop said the new sanctions by Biden on Friday are the primary driver but added that they come on top of a longer period of falling crude inventories.
“And time-spreads have been tightening, and flat prices have been rising since early December last year,” Schieldrop said in the report.
“These new sanctions will for sure drive down Russian exports of crude, products, and LNG,” he added.
“One of several effects is that it will reduce the supply of sour crude to the global market and thus tighten the sweet-sour crude spreads further, as well as likely also strengthen high sulfur fuel oil prices relative to Brent crude oil prices,” Schieldrop continued.
In the report, Schieldrop noted that “1-3 month time-spreads are shooting up to above $2 per barrel”, which he said “is consistent with Brent trading in the range of $80-90 per barrel”.
The chief commodities analyst also highlighted, however, that Brent crude is “in solid ‘overbought’ territory, so pullbacks are likely to flush that out before Brent sustainably can trade in the $80-90 per barrel range”.
In a research note sent to Rigzone by the JPM Commodities Research team, analysts at J.P. Morgan stated that, “despite new sanctions, Russia has some room to maneuver” but added that the country “will ultimately need to acquire non-sanctioned tankers or offer crude at or below $60 to use Western insurance and tankers, per [the] West’s pricing cap”.
The research note showed that J.P. Morgan expects the Brent crude oil price to average $74 per barrel in the first quarter of 2025 and $73 per barrel overall this year. J.P. Morgan sees the WTI crude oil price averaging $70 per barrel in the first quarter of this year and $69 per barrel overall in 2025, according to the research note.
The note also showed that J.P. Morgan expects the Brent price to average $61 per barrel and the WTI price to average $57 per barrel in 2026. Brent averaged $82 per barrel and WTI averaged $76 per barrel in 2024, according to the note.
Rigzone has contacted the Press Service and Information Department of the Russian Government for comment on Weston and Schieldrop’s statements, the research note from the JPM Commodities Research team, and the sanctions in general. At the time of writing, the Press Service and Information Department of the Russian Government has not yet responded to Rigzone.
To contact the author, email
