Brent: Supply risks contrast softer prices – ING
ING strategists Ewa Manthey and Warren Patterson note ICE Brent and WTI started the week lower despite persistent supply risks and elevated speculative length. They highlight Saudi Aramco’s curtailed allocations after pipeline damage, tighter European crude markets, and strong bullish positioning. Refined products remain tight, with Asian export declines supporting higher ICE gasoil crack spreads and keeping Western markets undersupplied.
Brent softens as risks stay elevated
"Crude oil started the week on a softer footing, with ICE Brent falling around 2% to below $102/bbl and WTI easing to around $98/bbl. The pullback comes despite ongoing geopolitical risks and continued concerns over global oil supply disruptions. Profit-taking after recent gains, together with hopes for constructive discussions at this week's UN General Assembly (UNGA) and the upcoming Trump-Xi meeting, helped improve market sentiment."
"Supply concerns remain elevated. Saudi Aramco has warned some European customers that it may be unable to allocate crude cargoes next month under long-term contracts as disruptions to the East-West pipeline limit crude availability at Yanbu. The pipeline was damaged in last week's drone attacks and could take several weeks to fully restart."
"Meanwhile, speculative positioning remains firmly bullish. ICE data show money managers increased their net long Brent position by 16,904 lots over the past week to 282,657 lots as of last Tuesday, the largest net long since late May 2026. The increase was driven largely by short covering as investors continue to price in greater upside risk from Middle East supply disruptions."
"Refined product markets also remain tight. August exports from key Asian suppliers declined amid constrained crude availability and refinery outages. India's gasoline and diesel exports fell 14.5% year-on-year and 19.2% YoY, respectively, while Chinese gasoline exports dropped 57.4% YoY."
"Although Chinese diesel exports increased, lower overall product availability from Asia has kept Western markets undersupplied and supported crack spreads. The ICE gasoil crack spread has risen to around $95/bbl this week, up from an average of roughly $74/bbl in August."
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