Oil commentary - 25 June 2024

Morning all. Tuesday, 25th June, and if one more person says to me, “Is it coming home?”, I’m going to hit them on top of the head with three lions. It’s not, by the way, but let’s not get bogged down in who might be bringing home a trophy this summer (Spain, just FYI). Let’s talk about OILLLLLL. Yummmmy delicious oilllll.

Brent! Trading at $86.03, up 0.02, and WTI is trading up 0.04 at $81.67. Sideways. Range-bound. Steady Eddie. That’s what you could call this oil market right now, and if you’re an OPEC minister, then you are packing the Rimowa for your annual month-long trip down to your bolt hole in Lake Como with a bit of a smug look on your face. ‘Twas only two weeks ago, my oily friends, that the market was trading below $80 and London oil trading floors were filled with hushed tones of “too much oil, bruv” and “nah, that ain’t done it, Mick, too early, innit,” and perhaps a “Umm, Tarquin! I’m off to polish the MG. Would you sell some Brent structure for me, old chap? Tally ho.” Some say I stereotype. I disagree.

Back to oil though – here we are, back nicely within the comfort bosom of $85 per barrel. Brent structure has roofed up to 1.60ish for Aug/Oct Brent, and all this on the back of the very same reasons that Mick and Tarquin are at loggerheads with reality. Put simply, coming into the summer, and trust me here in the Middle East we are very much in the thick of summer, there simply is not enough oil. Or as my old podcast mate Rus would say, “But there is, Matt, there’s just not the right type of oil.” (insert eye-roll emoji). He has a point though, but it doesn’t really matter when you’re at the coalface of markets. $85 is looking very well supported. If global tensions continue to escalate, which sadly if they aren’t escalating (which they are), then they certainly aren’t calming down. Then I think we could be looking at $90 per barrel for Brent, purely down to the market pricing in some war risk premium. Quite what this is worth though, is anyone’s guess.

That aside, from a physical fundamental view, $85 for Brent seems just about right. Now if you’ll excuse me, one, two, three - You’ve got to hold and give, but do it at the right time. You can be slow or fast, but you must get to the line. Good day.