Flux News

In a special episode of our Onyx Leadership podcast series, Group CEO Greg Newman sits down with Jorge Montepeque, the new Managing Director - Benchmarking. Jorge, an industry legend, pioneered oil pricing by introducing benchmarks, revolutionising communication across different sites worldwide.

When Greg first started trading, most traders relied on Yahoo Messenger for precise time stamps. Then came Jorge, reinventing communication, making it faster and introducing a platform enabling traders to communicate down to the millisecond—a game-changer for the oil trading world.

With over forty years of experience, Jorge is an icon and a pivotal figure in the oil industry. Do not miss this must-watch episode.

Chapters for this episode are: 
0:00 Welcome and introduction
4:09 Jorge's career and the creation of benchmarking
15:05 Price windows
22:05 Adopting new technologies in trading
27:20  Establishing flat price
40:33 Importance of derivatives

It's been a bullish week for crude flat price this week and has been supported above $80 levels, reaching a peak of $85.50, which is seemingly finding resistance at current levels. However, overall market sentiment has been quite bullish from both hedge funds and speculators alike.

 As for refinery margins; there's been a week-on-week decline of nearly $3/bbl in the prompt. Currently on a downtrend but where will it find support? 

 Looking at oil from a macro perspective, China has cut the five-year loan frame rate by 25 basis points to 3.95%. Not only was that unexpected in the market, but this was the biggest move they've ever made, highlighting the urgency its central bank is trying to create to stimulate growth in the economy.

 Looking to CFTC and how people are positioned, we've been seeing hedge funds loading up on positions in both crude and refined products, but especially on crude futures in both Brent and WTI.

 Vincent's trade idea is Long Naphtha Cracks (A Contrarian Trade Idea – that found the bottom on Monday after an immense sell-off last week). We'll have a new Trade Idea out tomorrow, so make sure to subscribe to our YouTube channel to be notified.

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below:

Greg Newman:  https://www.linkedin.com/in/oilderivatives/
Vincent Wu:   https://www.linkedin.com/in/vincent-wu-099816125/
James Brodie:  https://www.linkedin.com/in/jamesbrodiecmt/

Chapters for this episode are: 
0:00 Welcome 
0:47 This Week in Trading 
4:05 Macro Market News
7:29 CFTC Data
11:21 "Googling Oil:" World Oil News 
15:58 Trade Idea 
18:50 Poll Results 
19:25 What to Watch in the Macro Market

Last week, Brent crude flat price rallied, pushing up over $80/bbl and staying there since then. The rejected ceasefire deal on Feb 06 supported this bullish momentum.

We've seen strength across refinery margins - particularly in Europe - with a notable rally in product prices, including strong bidding in the physical market. Greg, Martha, and James discuss ongoing geopolitical conflict, refinery outages, and potential oversaturation due to early positioning in Q3 and the need to balance refinery maintenance with market demand to sustain current price levels.

In macroeconomic news, the Saudi government has instructed Aramco to halt expansion initiatives, signalling a shift towards green energy. The hosts also discuss conflicting actions from Australia's top oil and gas producer.

Martha's trade idea this week is to buy the FEI (Asian benchmark) propane contract and sell the CP (Saudi Arabia) propane contract, as the CP levels have dropped recently. This may lead to profit-taking, while there is support for the FEI with potential poor liquidity, making it a short-term contrarian trade with good upside.

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below:
Greg Newman: https://www.linkedin.com/in/oilderivatives/
Martha Dowding: https://www.linkedin.com/in/martha-dowding-ab84801a6/
James Brodie: https://www.linkedin.com/in/jamesbrodiecmt/

Chapters for this episode are: 
0:00 Welcome 
0:30 This Week in Trading 
6:31 Macro Market News 
12:45 Refinery Margins
18:20 "Googling Oil:" World Oil News 
26:26 Trade Idea
29:09 Poll Results and Outro

Brent futures softened from over $80 last week, to stabalise around $78/bbl on Feb 6. Geopolitically, tensions persist in the Middle East with ongoing conflicts and ceasefire talks proving elusive. Despite positive economic indicators, market enthusiasm appears lacking, reflected in WTI spreads in contango and a rangebound regime across the crude complex.

As for the refinery margin change; the weakness in crude oil is impacting refined products. The Dated Brent market, with a lack of interest in expiry and resistance observed in DFLs amid increased March-loading barrels and Asia refinery maintenance.

For macro economic news and the one to watch, we've seen continued weakness in inflation, as yesterday European PPI has come down 10.6% year on year. However, the big news is in the US payroll data from last week. Although the market was looking for weakness, some were shocked to find the US unemployment rate fell from 3.8 to 3.7%.

Martha's trade idea is to buy the Q3 Gasnap (European Gasoline EBOB, sell European naphtha). 

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below: 

Greg Newman: https://www.linkedin.com/in/oilderivatives/
Vincent Wu: https://www.linkedin.com/in/vincent-wu-099816125/
Martha Dowding: https://www.linkedin.com/in/martha-dowding-ab84801a6/
James Brodie: https://www.linkedin.com/in/jamesbrodiecmt/

Chapters for this episode are: 
0:00 Welcome 
0:54 This Week in Trading 
4:36 CFTC Positioning
6:05 Macro Market News 
13:48 Refinery Margins
20:50 LPGs
23:34 Chinese Economy
27:59 US Economy
28:39 "Googling Oil:" World Oil News 
36:30 Biden Banning LNG Exports
41:58 Trade Idea
45:41 Poll Results and Outro

Brent futures spent most of the week with prices typically above $80 per barrel, recording a second week of gains. Geopolitical risk premiums strengthened, and positive economic news from the US, along with promising developments in China, contributed to the positive sentiment.

As for refinery margins, it's been a positive week, with products driving the rally and support seen from every product down the barrel.

Greg reflects on the paradox of the Dated Brent market, pivotal in global crude oil pricing, being potentially net bearish, yet experiencing upward price momentum due to financial inflows. Brent spreads, and speculative forces stemming from the Red Sea, are prompting the question of whether the current upward momentum can be sustained and if the North Sea market, for instance, might be mistaken.

If you'd like to see our trade idea of the week, check it out here: https://youtu.be/MDqmKHSXWKU

And you can now subscribe to our newsletter by clicking on the link below:

https://www.linkedin.com/build-relation/newsletter-follow?entityUrn=7148228862387109888

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below:

Greg Newman: https://www.linkedin.com/in/oilderivatives/
Vincent Wu: https://www.linkedin.com/in/vincent-wu-099816125/
Martha Dowding: https://www.linkedin.com/in/martha-dowding-ab84801a6/

Chapters for this episode are: 
0:00 Welcome 
0:58 Brent Market
11:59 Refinery Margins
20:08 Trade Idea
26:44 "Googling Oil:" World Oil News 
29:25 Poll Results and Outro

Brent futures saw sub $77/bbl levels on 17 Jan after poor economic data from China saw the GDP rise by 5.2% in Q4 compared to the forecast of 5.3%. CFTC data for the week to Jan 16, (in Brent futures) saw a continuation of a more bullish sentiment, with bullish speculators adding almost 15mbbls (+5%) of length, whilst their bearish counterparts decreased their short positioning by 1.5mbbls (-2%). In WTI, a more bearish stance was seen. Bulls removed over 5mbbls (-2.5%) of long positions, whilst bears added to their short positionings by over 13mbbls (12%).  

As for the changes in the refinery margin, the strength seen in the Dated Brent market has been overshadowed by refined product strength allowing margins to rally. Gasoline was lifted by good summer buying and the prompt being bought by refiners points to expected future strength. European gasoil rallied from heavy selling in EW (down past -$35) due to the Red Sea turmoil resulting in AG Europe-bound loadings dropping 55% M-o-M. 

The headline to watch right now is Archer-Daniels-Midland (ADM), whose shares plunged as the CFO was put on “Administrative Leave” pending ongoing investigation regarding certain accounting practices and procedures. As such the release of Q4 earnings is delayed. 

In our Googling Oil segment the research team and Greg discuss the recent Ukraine drone attack and Russia becoming the biggest oil supplier in 2023. 

Our Trade Idea comes from Head of Learning and Development, James Brodie who says to watch the Bank of Japan potentially raising rates and moving away from negative rates, which could result in a massive boost. He suggests to go long Yen, especially against the pound and the euro. 

If you would like to connect with any of our hosts on LinkedIn, please click on the hyperlinks below: 

Greg Newman:  https://www.linkedin.com/in/oilderivatives/
Vincent Wu:  https://www.linkedin.com/in/vincent-wu-099816125/
Martha Dowding:  https://www.linkedin.com/in/martha-dowding-ab84801a6/
James Brodie: https://www.linkedin.com/in/jamesbrodiecmt/

AND if you're interested in learning about what the upcoming US Election could mean for the price of oil, please make sure to check out the latest episode of our Onyx Leadership Series here: Onyx Leadership: Jonah Van Bourg S6 | E03

 Chapters for this episode are: 
0:00 Welcome 
0:48 This Week in Trading  
4:10 Macro Market News 
15:44 Brent/Dubai
20:02 Refinery Margins
30:35  "Googling Oil:" World Oil News 
37:35 Trade Idea of the Week

Onyx Director Jonah Van Bourg discusses his extremely eventful career thus far with CEO Greg Newman. From how his experience working at Goldman Sachs and Vitol, to working on the floor on Lehman Brother's floor, in the midst of the biggest bankruptcy in American history.
 
Jonah discusses his experience in crypto trading and sheds light on how crypto and oil are incredibly similar commodities in a lot of ways, drawing parallels to their shaky beginnings, where people had discovered it, but didn't necessarily know how to use it yet, or the derivatives that would come from it.
 
With the US election looming closer, there's a lot to be said about how the outcome of the election will impact the price of oil and the energy markets. What could happen if there are wild card events like Trump or Biden dying, to how the transition of party leadership could tear up the oil industry. 

If you’d like to connect with Greg or Jonah on LinkedIn, click on the links below:
Greg Newman: https://www.linkedin.com/in/oilderivatives/ 
Jonah Van Bourg: https://www.linkedin.com/in/jvanbourg/

Chapters for this episode are: 
0:00 Welcome and Introduction
4:29 Jonah's career and working at Lehman Brothers
21:02 Derivatives trading
26:33 Crypto as a commodity
35:13 Onyx's mission and evolution of the oil market
45:32 2024 outlook
48:27 2024 US election and effects on the market

Supply and demand modelling is no longer enough to accurately determine market value.  The recent market has been a perfect illustration of this in key differentials in the oil market, which have been driven by stop outs, pushing market prices against the fundamental consensus. Example discussed are the North Sea differential rally in prompt DFLs, Brent Dubai's move against market consensus and propane volatility in US contracts.

Onyx Capital Group CEO joins Research Associates Martha Dowding and Vincent Wu (dialing in from our Singapore office), to review the latest week of trading in oil, how things are playing out and what to watch going forward.

Flat price surpassed $80/bbl on Friday on the back of Red Sea tensions, as the UK and US launched attacks on Houthi targets in Yemen.

The current market sentiment for Brent Dubai suggests a noticeable shift towards buying, with significant momentum on the buy side. Martha expresses confidence in the likelihood of this trend holding, despite attempts to sell off in recent days, there is evident support at current levels. Large market players are actively seeking to buy Brent Dubai, as indicated by changing flows.

Refinery margins are exhibiting strength across various products, particularly in EBOB and gasoil. Despite a total purchase of 292 kbbls by trade houses in June, July, August, September, and Q3, Q3 prices are historically high, while Q1 prices are comparatively less robust. The market is influenced by factors such as the Dangote refinery's impact and Pemex's anticipated boost in fuel production by 1.05mbpd, with RBOB crack low and increased U.S. exports to Australia and Mozambique.

In our macro-economic headlines to watch. The team discusses; 

U.S. OIS curve (overnight index swap) is pricing 163 basis points of cuts by the Federal Reserve this year.

Inflation is grinding lower towards target rates and is no longer striking fear in the markets. In fact China is now clearly in deflation!

Manufacturing globally is weak, German industrial production just had its 6th consecutive monthly decline (down 4.8% YoY) and 14% below its pre-pandemic peak.

You can watch our Trade Idea of the week here: https://youtu.be/g1_AIsKe4-s

If you’d like to connect with Greg, Martha or Vincent on LinkedIn, click on the links below: 

Greg Newman: https://www.linkedin.com/in/oilderivatives/
Vincent Wu: https://www.linkedin.com/in/vincent-wu-099816125/
Martha Dowding: https://www.linkedin.com/in/martha-dowding-ab84801a6/

Chapters for this episode are: 
0:00 Welcome
0:50 This Week in trading
2:17 Brent Futures
7:54 Brent-Dubai             
15:26 News in the Oil Market 
23:34 Refinery Margins
27:53 Weather Events and the NGL Market
32:15 Macro News and Market Outlook

World of Oil Derivatives is back for 2024!

With a new year, traders, market analysts and market observers are looking for a consensus. Research houses are making their claims, and banks their forecasts, and it will still be 1-2 months before we hear from trade houses and majors about their outlook for the year.

So could the global economy surprise us to the upside this year? Could we get lower interest rates that brings on a risk on move in macro markets?  Or, as always, could there be a geopolitical conflict that genuinely does impact supply?

Onyx CEO Greg Newman joins Research Associates Martha Dowding and Vincent Wu for an update on how Brent Futures have played out since Christmas. 

Greg, Martha and Vincent discuss the impact macro news events have on the market. From the Boeing malfunction to the recent earthquake in Japan, Greg sheds light on how huge events like this can be surprisingly bearish in the long term. However the Red Sea attacks are a different story, which the team will discuss.

We give an update on the refinery margins which are showing slight improvement week-on-week. Vincent sums it up by saying it’s a shit time to trade! The Trade Idea of the week is to short the February C4 ENT vs. C3 LST.

Make sure to leave a comment on our YouTube page, we’d love to hear from you.

If you’d like to connect with Greg, Martha or Vincent on LinkedIn, click on the links below:

Greg Newman: https://www.linkedin.com/in/oilderivatives/

Vincent Wu: https://www.linkedin.com/in/vincent-wu-099816125/

Martha Dowding: https://www.linkedin.com/in/martha-dowding-ab84801a6/

Jump straight to the chapter you’re interested in: 

02.33: Brent Futures

04.33: Googling Oil/Big Oil Headlines

14.26: Macro News Events on the Oil Market

27.00: Refinery Margins

33.15: Trade Idea of the week 

In another episode of our Onyx Leadership series, Onyx Capital Group CEO is joined by Onyx Partner and Head of Desk for NGL, Luke Mcdermott. 

Luke discusses his years of experience in the industry and the minutia of NGL’s. Most importantly Luke discusses the current situation of the Panama Canal and what that means for Traders and the economy.

Chapters for this episode are: 
0:00 Welcome 
1:14 NGLs
2:53 Shipping
6:50 Saudi shipping & market share
13:11 Europe, Asia & US
14:53 Panama Canal 101
19:56 Supply and arb economics
24:22 Hedging
30:12 Panama Canal issues
34:57 2024 outlook
41:35 Supply and demand