Analys
Sell on Mid-East tension rallies seems to be the preferred strategy these days

Risk off across the board with oil down 2%. Trading strategies looks fixed at sell-on-rallies ignited by Mid-East tensions. It is of course a risk-off day today so everything is red and Brent crude joining in by selling off 2% to USD 76.8/b . But the sense of oil market dynamics these days is that it jumps on Mid-East tensions when they flare up and then sell off on the back of weakening fundamentals as US commercial crude and product stocks inches from below the 2015-19 average through most of 2023 to now lately a jump of 23 m b above that reference. It has been a steady trend towards normality from 1 Sep 2023 when US commercial stocks were 35 m b below the mentioned average to now above that average. So trading strategy on oil seems to favor ”sell on Mid-East tension rallies”. The total meltdown of natural gas prices is also giving the oil market some chills and fear that the ”energy boom” from 2021-22-23 is now fading rapidly amid a global economy with bob-bob growth where US interest rates are still very high and a headwind to growth both in the US and elsewhere. So what is left of the part of the energy crisis which was ignited by Russia/Ukraine is still low mid-dist inventories. That is the only part of US commercial inventories which are still below the 2015-19 average.

Nominal or inflation adjusted historical oil prices versus US inventories calls for a current fair oil price of either USD 63/b or USD 75/b respectively. Crude oil prices are strongly related to US commercial crude and product stocks. If there has been no oil production productivity gains since 2008 then it is fair to inflation adjust historical oil prices when they are compared to historical inventories. Then USD 75/b for Brent crude is probably a fair price vs. latest US inventories. If however oil production productivity growth has been on par with inflation since 2008, then the cost of oil production has basically stayed unchanged both in real and nominal terms. In that case on shouldn’t inflation adjust historical prices since 2008 and instead use nominal prices when comparing to historical inventories. In that case the fair price of Brent crude given current US inventories is probably closer to USD 63/b.
But add some premiums for Mid-East tensions and low US SPR. But then you probably need to make some positive additions. Some for the tensions in the Middle East and risk to supply there. Some for the added inventories needed and costs involved in transporting more oil around Africa. Some for US SPR inventories which are at only 50% of capacity but that may not matter too much since the US these days is a significant exporter and do not need the SPR as much any more.
But make some subtraction for current bearish trend. But then lastly some subtractions: One due to the ongoing bearish trend in US commercial inventories amid a lukewarm global economy. And one for the chill from a total meltdown in natural gas prices with the fear that oil fundamentals and prices will follow suite.
These reflections are about current trends and dynamics and not a change in SEB outlook. These reflections are not about what we think oil price will average overall in 2024, but all about a current snapshot, current situation of oil market dynamics.
It has been a steady deterioration in US commercial crude and product stocks since 1 September 2023 to now a jump above the 2015-19 seasonal average.

Inflation adjusted Brent crude oil prices since 2008 in scatter plot vs. total US commercial crude and product stocks indicating a fair price of Brent crude currently at USD 75/b given current inventories.

Nominal Brent crude oil prices since 2008 in scatter plot vs. total US commercial crude and product stocks (excl. SPR) indicating a fair price of Brent crude currently at USD 63/b given current inventories.

Analys
Brent edges higher as India–Russia oil trade draws U.S. ire and Powell takes the stage at Jackson Hole

Best price since early August. Brent crude gained 1.2% yesterday to settle at USD 67.67/b, the highest close since early August and the second day of gains. Prices traded to an intraday low of USD 66.74/b before closing up on the day. This morning Brent is ticking slightly higher at USD 67.76/b as the market steadies ahead of Fed Chair Jerome Powell’s Jackson Hole speech later today.

No Russia/Ukraine peace in sight and India getting heat from US over imports of Russian oil. Yesterday’s price action was driven by renewed geopolitical tension and steady underlying demand. Stalled ceasefire talks between Russia and Ukraine helped maintain a modest risk premium, while the spotlight turned to India’s continued imports of Russian crude. Trump sharply criticized New Delhi’s purchases, threatening higher tariffs and possible sanctions. His administration has already announced tariff hikes on Indian goods from 25% to 50% later this month. India has pushed back, defending its right to diversify crude sourcing and highlighting that it also buys oil from the U.S. Moscow meanwhile reaffirmed its commitment to supply India, deepening the impression that global energy flows are becoming increasingly politicized.
Holding steady this morning awaiting Powell’s address at Jackson Hall. This morning the main market focus is Powell’s address at Jackson Hole. It is set to be the key event for markets today, with traders parsing every word for signals on the Fed’s policy path. A September rate cut is still the base case but the odds have slipped from almost certainty earlier this month to around three-quarters. Sticky inflation data have tempered expectations, raising the stakes for Powell to strike the right balance between growth concerns and inflation risks. His tone will shape global risk sentiment into the weekend and will be closely watched for implications on the oil demand outlook.
For now, oil is holding steady with geopolitical frictions lending support and macro uncertainty keeping gains in check.
Oil market is starting to think and worry about next OPEC+ meeting on 7 September. While still a good two weeks to go, the next OPEC+ meeting on 7 September will be crucial for the oil market. After approving hefty production hikes in August and September, the question is now whether the group will also unwind the remaining 1.65 million bpd of voluntary cuts. Thereby completing the full phase-out of voluntary reductions well ahead of schedule. The decision will test OPEC+’s balancing act between volume-driven influence and price stability. The gathering on 7 September may give the clearest signal yet of whether the group will pause, pivot, or press ahead.
Analys
Brent sideways on sanctions and peace talks

Brent crude is currently trading around USD 66.2 per barrel, following a relatively tight session on Monday, where prices ranged between USD 65.3 and USD 66.8. While expectations of higher OPEC+ supply continue to weigh on sentiment, recent headlines have been dominated by geopolitics – particularly developments in Washington.

At the center is the White House meeting between Trump, Zelenskyy, and several key European leaders. During the meeting, Trump reportedly placed a direct call to Putin to discuss a potential bilateral sit-down between Putin and Zelenskyy, which several European officials have said could take place within two weeks.
While the Kremlin’s response remains vague, markets have interpreted this as a modestly positive signal, with both equities and global oil prices holding steady. Brent is marginally lower since yesterday’s close, while U.S. and Asian equity markets remain broadly flat.
Still, the political undertone is shifting, and markets may be underestimating the longer-term implications. According to the NY times, Putin has proposed a peace plan under which Russia would claim full control of the Donbas in exchange for dropping demands over Kherson and Zaporizhzhia – territories it has not yet seized.
Meanwhile, discussions around Ukraine’s long-term security framework are starting to take shape. Zelenskyy appeared encouraged by Trump’s openness to supporting a post-war security guarantee for Ukraine. While the exact terms remain unclear, U.S. special envoy Steve Witkoff stated that Putin had signaled willingness to allow Washington and its allies to offer Kyiv a NATO-style collective defense guarantee – a move that would significantly reshape the regional security landscape.
As diplomatic efforts gain momentum, markets are also beginning to assess the potential consequences of a partial or full rollback of U.S. sanctions on Russian energy. Any unwind would likely be gradual and uneven, especially if European allies resist or delay alignment. The U.S. could act unilaterally by loosening financial restrictions, granting Russian firms greater access to Western capital and services, and effectively neutralizing the price cap mechanism. However, the EU embargo on Russian crude and products remains a more immediate constraint on flows – particularly as it continues to tighten.
Even if the U.S. were to ease restrictions, Moscow would remain heavily reliant on buyers like India and China to absorb the majority of its crude exports, as European countries are unlikely to quickly re-engage in energy trade. That shift is already playing out. As India pulls back amid newly doubled U.S. tariffs – a response to its ongoing Russian oil purchases – Chinese refiners have stepped in.
So far in August, Chinese imports of Russia’s Urals crude – typically shipped from Baltic and Black Sea ports – have nearly doubled from the YTD average, with at least two tankers idling off Zhoushan and more reportedly en route (Kpler data). The uptick is driven by attractive pricing and the absence of direct U.S. trade penalties on China, which remains in a delicate tariff truce with Washington.
Indian refiners, by contrast, are notably more cautious – receiving offers but accepting few. The takeaway is clear: China is acting as the buyer of last resort for surplus Russian barrels, likely directing them into strategic storage. While this may temporarily cushion the effects of sanctions relief, it cannot fully offset the constraints imposed by Europe’s ongoing absence.
As a result, any meaningful boost to global supply from a rollback of U.S. sanctions on Russia may take longer to materialize than headlines suggest.
Analys
Crude inventories builds, diesel remain low

U.S. commercial crude inventories posted a 3-million-barrel build last week, according to the DOE, bringing total stocks to 426.7 million barrels – now 6% below the five-year seasonal average. The official figure came in above Tuesday’s API estimate of a 1.5-million-barrel increase.

Gasoline inventories fell by 0.8 million barrels, bringing levels roughly in line with the five-year norm. The composition was mixed, with finished gasoline stocks rising, while blending components declined.
Diesel inventories rose by 0.7 million barrels, broadly in line with the API’s earlier reading of a 0.3-million-barrel increase. Despite the weekly build, distillate stocks remain 15% below the five-year average, highlighting continued tightness in diesel supply.
Total commercial petroleum inventories (crude and products combined, excluding SPR) rose by 7.5 million barrels on the week, bringing total stocks to 1,267 million barrels. While inventories are improving, they remain below historical norms – especially in distillates, where the market remains structurally tight.
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