Analys
Crude oil comment – Hard to be bullish for the coming 6 months

Crude oil price action – Down and then back towards the $48/b converging point – for now
- Crude oil comment – Hard to be bullish for the coming 6 months
- Graph: US commercial crude and product stocks – on par with two years production from US frack log
- Graph: Less Brent crude 12mth contango lately, but mostly since longer dated contracts are falling
- Graph: The relentless decline of the Brent crude oil December 2019 contract
- Graph: China Leading Index inched yet lower to 98.23 and the lowest since 2009
Crude oil price action – Down and then back towards the $48/b converging point – for now
Brent crude oil traded down 2.6% yesterday to $47.34/b amid a broad based sell-off in European and US equities (-2.6%). Growth concerns for China (industrial profits down 8.8% y/y in August) and the close to 30% drop in Glencore shares helped to drive the bearish sentiment. Do note that Industrial metals only lost 1% so there was not really much of a shake-out in metals on the back of rising China concerns yesterday. Note that while Brent crude saw a percentage wise large drop yesterday, it did not stray too far from the $48/b line which has been a converging price point lately. Today Asia is in the red following the US from last night, but US equities are rebounding. Also Brent crude is rebounding today to $47.7/b and is closing in on the $48/b level again.
Crude oil comment – Hard to be bullish for the coming 6 months
It is difficult to be bullish for the coming 6 months. First out in October and November is the refining turnaround season where refineries now increasingly are taken off-line for maintenance and adjustments ahead of the Northern hemisphere winter season. As this happens more crude oil is left in the market as refineries are not consuming it. Chinese refineries are also projected to process some 250 kb/d to 400 kb/d less in Q4-15 than in Q3-15. At the same time crude oil production in the North Sea is increasing into October and may rise further in November and December, potentially to multi year high. While Q4 is normally a strong demand period of the year it also marks the entrance into demand weakness in Q1 and Q2. We are quite confident that OPEC will not trim its production at its December 4 meeting in Vienna. We are also quite confident that Iran will increase exports of crude oil in Q1 and Q2 as sanctions are lifted and that we overall will get yet another strong rise in global oil stocks in 1H-16. Global oil inventories are already very high with commercial OECD stocks up 272 mb y/y in July to 2972 mb. Of this the US account for 825 mb of crude, gasoline and distillates with a y/y rise of 124 mb (September). On top of this we have the so called US fracklog of drilled wells that have not yet been fracked and put into production. It is difficult to know the size of the fracklog exactly but one estimate places it at around 4500 wells. If we view the fracklog as a kind of oil storage, then 4500 wells amounts to around 800 mb of crude oil that can be put into the market over two years. In other words if all these 4500 wells were producing for two years they would yield some 800 mb of crude oil. After those two years comes the tail-production which will yield even more oil, but over quite a few years.
Counter to this however is the intensifying credit and liquidity situation for the many smaller US shale oil players which will lead to continued declining US crude oil production. Overall however there is limited risk to the upside with so much oil at hand in stocks around the world as well as the US fracklog. In a slightly longer perspective towards the end of 2016 deciding whether the market will be in surplus or deficit in Q4-16 is highly uncertain and will amongst other things depend highly on OPEC production. OPEC has increased production by between 1-2 mb/d this year with main contributors being Iraq and Saudi Arabia. While we expect increasing exports from Iran, it is highly uncertain whether we will see the same increase from Iraq and Saudi Arabia in 2016 as in 2015.
US commercial crude and product stocks – on par with two years production from US frack log
Two years of production from the US fracklog of yet unfracked, but drilled wells will yield crude oil in a magnitude of the current US commercial oil inventories.
Less Brent crude 12mth contango lately, but mostly since longer dated contracts are falling
A key factor here is however that this is not so much to do with strengthening in the front end of the curve, but more to do with a relentless decline in longer dated contracts.
The relentless decline of the Brent crude oil December 2019 contract
The front end of the Brent crude oil curve seems to be very well supported at the $48/b level for the time being. However as the longer dated contracts like the Dec-19 contract ticks lower and lower it forces the curve to be flatter with less contango. If stocks are to increase yet further, which is our base case into 1H-16, an increase in the contango will however be needed. If the longer dated contracts continue to push lower or just stay steady at current level, then the front end contract will need to move lower in order to create the necessary contango to hold increasing storage. At the moment we expect the longer dated contracts to continue lower as producers need to hedge out on the curve while consumer will preferred to purchase oil more towards the front end of the curve in order to utilize contango and low spot crude oil prices.
And then one last graph for the China bears. The China Leading Index inched yet lower to 98.23 and the lowest level since 2009.
Watch out for China PMI manufacturing and services index on Thursday this week.
Bjarne Schieldrop
Chief analyst, Commodities
SEB Markets
Merchant Banking
Analys
Brent crude ticks higher on tension, but market structure stays soft

Brent crude has climbed roughly USD 1.5-2 per barrel since Friday, yet falling USD 0.3 per barrel this mornig and currently trading near USD 67.25/bbl after yesterday’s climb. While the rally reflects short-term geopolitical tension, price action has been choppy, and crude remains locked in a broader range – caught between supply-side pressure and spot resilience.

Prices have been supported by renewed Ukrainian drone strikes targeting Russian infrastructure. Over the weekend, falling debris triggered a fire at the 20mtpa Kirishi refinery, following last week’s attack on the key Primorsk terminal.
Argus estimates that these attacks have halted ish 300 kbl/d of Russian refining capacity in August and September. While the market impact is limited for now, the action signals Kyiv’s growing willingness to disrupt oil flows – supporting a soft geopolitical floor under prices.
The political environment is shifting: the EU is reportedly considering sanctions on Indian and Chinese firms facilitating Russian crude flows, while the U.S. has so far held back – despite Bessent warning that any action from Washington depends on broader European participation. Senator Graham has also publicly criticized NATO members like Slovakia and Hungary for continuing Russian oil imports.
It’s worth noting that China and India remain the two largest buyers of Russian barrels since the invasion of Ukraine. While New Delhi has been hit with 50% secondary tariffs, Beijing has been spared so far.
Still, the broader supply/demand balance leans bearish. Futures markets reflect this: Brent’s prompt spread (gauge of near-term tightness) has narrowed to the current USD 0.42/bl, down from USD 0.96/bl two months ago, pointing to weakening backwardation.
This aligns with expectations for a record surplus in 2026, largely driven by the faster-than-anticipated return of OPEC+ barrels to market. OPEC+ is gathering in Vienna this week to begin revising member production capacity estimates – setting the stage for new output baselines from 2027. The group aims to agree on how to define “maximum sustainable capacity,” with a proposal expected by year-end.
While the IEA pegs OPEC+ capacity at 47.9 million barrels per day, actual output in August was only 42.4 million barrels per day. Disagreements over data and quota fairness (especially from Iraq and Nigeria) have already delayed this process. Angola even quit the group last year after being assigned a lower target than expected. It also remains unclear whether Russia and Iraq can regain earlier output levels due to infrastructure constraints.
Also, macro remains another key driver this week. A 25bp Fed rate cut is widely expected tomorrow (Wednesday), and commodities in general could benefit a potential cut.
Summing up: Brent crude continues to drift sideways, finding near-term support from geopolitics and refining strength. But with surplus building and market structure softening, the upside may remain capped.
Analys
Volatile but going nowhere. Brent crude circles USD 66 as market weighs surplus vs risk

Brent crude is essentially flat on the week, but after a volatile ride. Prices started Monday near USD 65.5/bl, climbed steadily to a mid-week high of USD 67.8/bl on Wednesday evening, before falling sharply – losing about USD 2/bl during Thursday’s session.

Brent is currently trading around USD 65.8/bl, right back where it began. The volatility reflects the market’s ongoing struggle to balance growing surplus risks against persistent geopolitical uncertainty and resilient refined product margins. Thursday’s slide snapped a three-day rally and came largely in response to a string of bearish signals, most notably from the IEA’s updated short-term outlook.
The IEA now projects record global oversupply in 2026, reinforcing concerns flagged earlier by the U.S. EIA, which already sees inventories building this quarter. The forecast comes just days after OPEC+ confirmed it will continue returning idle barrels to the market in October – albeit at a slower pace of +137,000 bl/d. While modest, the move underscores a steady push to reclaim market share and adds to supply-side pressure into year-end.
Thursday’s price drop also followed geopolitical incidences: Israeli airstrikes reportedly targeted Hamas leadership in Doha, while Russian drones crossed into Polish airspace – events that initially sent crude higher as traders covered short positions.
Yet, sentiment remains broadly cautious. Strong refining margins and low inventories at key pricing hubs like Europe continue to support the downside. Chinese stockpiling of discounted Russian barrels and tightness in refined product markets – especially diesel – are also lending support.
On the demand side, the IEA revised up its 2025 global demand growth forecast by 60,000 bl/d to 740,000 bl/d YoY, while leaving 2026 unchanged at 698,000 bl/d. Interestingly, the agency also signaled that its next long-term report could show global oil demand rising through 2050.
Meanwhile, OPEC offered a contrasting view in its latest Monthly Oil Market Report, maintaining expectations for a supply deficit both this year and next, even as its members raise output. The group kept its demand growth estimates for 2025 and 2026 unchanged at 1.29 million bl/d and 1.38 million bl/d, respectively.
We continue to watch whether the bearish supply outlook will outweigh geopolitical risk, and if Brent can continue to find support above USD 65/bl – a level increasingly seen as a soft floor for OPEC+ policy.
Analys
Waiting for the surplus while we worry about Israel and Qatar

Brent crude makes some gains as Israel’s attack on Hamas in Qatar rattles markets. Brent crude spiked to a high of USD 67.38/b yesterday as Israel made a strike on Hamas in Qatar. But it wasn’t able to hold on to that level and only closed up 0.6% in the end at USD 66.39/b. This morning it is starting on the up with a gain of 0.9% at USD 67/b. Still rattled by Israel’s attack on Hamas in Qatar yesterday. Brent is getting some help on the margin this morning with Asian equities higher and copper gaining half a percent. But the dark cloud of surplus ahead is nonetheless hanging over the market with Brent trading two dollar lower than last Tuesday.

Geopolitical risk premiums in oil rarely lasts long unless actual supply disruption kicks in. While Israel’s attack on Hamas in Qatar is shocking, the geopolitical risk lifting crude oil yesterday and this morning is unlikely to last very long as such geopolitical risk premiums usually do not last long unless real disruption kicks in.
US API data yesterday indicated a US crude and product stock build last week of 3.1 mb. The US API last evening released partial US oil inventory data indicating that US crude stocks rose 1.3 mb and middle distillates rose 1.5 mb while gasoline rose 0.3 mb. In total a bit more than 3 mb increase. US crude and product stocks usually rise around 1 mb per week this time of year. So US commercial crude and product stock rose 2 mb over the past week adjusted for the seasonal norm. Official and complete data are due today at 16:30.
A 2 mb/week seasonally adj. US stock build implies a 1 – 1.4 mb/d global surplus if it is persistent. Assume that if the global oil market is running a surplus then some 20% to 30% of that surplus ends up in US commercial inventories. A 2 mb seasonally adjusted inventory build equals 286 kb/d. Divide by 0.2 to 0.3 and we get an implied global surplus of 950 kb/d to 1430 kb/d. A 2 mb/week seasonally adjusted build in US oil inventories is close to noise unless it is a persistent pattern every week.
US IEA STEO oil report: Robust surplus ahead and Brent averaging USD 51/b in 2026. The US EIA yesterday released its monthly STEO oil report. It projected a large and persistent surplus ahead. It estimates a global surplus of 2.2 m/d from September to December this year. A 2.4 mb/d surplus in Q1-26 and an average surplus for 2026 of 1.6 mb/d resulting in an average Brent crude oil price of USD 51/b next year. And that includes an assumption where OPEC crude oil production only averages 27.8 mb/d in 2026 versus 27.0 mb/d in 2024 and 28.6 mb/d in August.
Brent will feel the bear-pressure once US/OECD stocks starts visible build. In the meanwhile the oil market sits waiting for this projected surplus to materialize in US and OECD inventories. Once they visibly starts to build on a consistent basis, then Brent crude will likely quickly lose altitude. And unless some unforeseen supply disruption kicks in, it is bound to happen.
US IEA STEO September report. In total not much different than it was in January

US IEA STEO September report. US crude oil production contracting in 2026, but NGLs still growing. Close to zero net liquids growth in total.

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