Flux News

The resolution of the OPEC drama has brought contentment to market players as they embrace a stable oil price in the low 70s. Despite this relief, demand concerns persist as Brent spreads remain in contango until April/May'24, indicating a prevailing weak physical sentiment in the market.

Complicating matters, a geopolitical risk premium hangs over the Red Sea, prompting commercial shipping companies to avoid the area. Instead, vessels are rerouted through the safer but longer passage around the Cape of Good Hope due to heightened tensions involving the Houthis. These actions, including attempts to obstruct cargo shipments to Israel and claiming responsibility for past attacks, have placed major shipping companies like Maersk and Hapag-Lloyd on high alert.

Refinery margins have seen increased support, with the influence of crude oil being amplified in the products. Notably, there has been a positive shift in gasoil and European gasoline (EBOB). Despite EBOB experiencing robust bidding throughout the week, there has been a noteworthy shift in the trade house's stance from bidding to selling in significant volume in the prompt market.

Martha gives her trade Idea of the week; going long in the Feb WTI/Brent futures spread, but you can learn more about that here: https://youtu.be/NKUR7n_rYmY

Chapters for this episode are: 
0:00 Welcome
0:51 Market update
2:40 2023 market reflections
5:55 Refined products update
12:03 Trader positioning
27:15 Trade idea of the week
35:36 Thanks for a great year

In the latest developments in the global oil market, bearish sentiment has taken hold as OPEC cuts clash with the surge in non-OPEC production (notably from the United States and Guyana). The market is treading cautiously, adopting a risk-off stance as it awaits crucial macroeconomic headlines. Investors are on edge in anticipation of the CPI report on Tuesday and the Federal Reserve meeting scheduled for Wednesday.

Brent crude has found stability, settling around the mid-70s, a level deemed comfortable by industry observers. But a glimmer of positivity emerged as a bullish non-farm payroll result put a temporary halt to the downward spiral of crude prices.

As for changes in the refinery margin, W-O-W decrease for the first time in weeks and weakness in products is finally overtaking the weakness in Dated as the products are finally driving the margins.

The biggest loser is gasoline now as RBBR hasn’t been strong, and data revealed today shows Euro stocks up in Nov 1mbbls and the US have seen 3 weeks of increasing builds US gasoline imports from Europe plunged in the first week of December to the lowest in more than three years.

Vincent brings an interesting trade idea this week. He suggests going long in the Jan/Feb EBOB spread. To catch the full Trade Idea, click here: https://youtu.be/2P-_yGY4BDU 

Links below to Greg, Vincent and Martha’s LinkedIn pages:

 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/

Industry Legend and Director of Levmet, Kurt Chapman, joins Onyx CEO Greg Newman to discuss the evolution of the Dated Brent market.

Kurt discusses his plethora of experience in the physical and financial markets. He graduated from Harvard University with a BA in Economics and went on to serve as an Infantry Officer in the US Marine Corps. He explains how his time in the Marines prepared him for life as a Commodity Trader.

His wide-spanning trading career started on Wall Street in the '80s, where trading commodities was relatively new, and by 2006 Kurt joined Mercuria Energy Trading in Geneva as an Equity Partner and Global Head of Crude. In his 30 years in the industry, he’s seen significant change in how Crude is traded. From volatility in the early 2000s and the commodities super cycle, to the economic crash in 2009, to OPEC bringing discipline back into the market, Kurt discusses the evolution of the market from making trades via phone calls and pagers to the migration to the electronic exchange and how that affected Traders' lines of work.

Kurt and Greg discuss how the Brent Benchmark has evolved over the years and now includes US crude. Its ability to evolve is what keeps the Brent benchmark the number one benchmark in oil. They also discuss the future of Crude Oil Trading and where the market is heading. 

Onyx Research Associate Martha Downing joins CEO Greg Newman with a market update and the pair discuss how the markets were affected pre and post OPEC meeting.

Martha informs us how the refinery margin changed. Crude and the products are still weak and gasoil is weighing down the margins in both regions. The end of last month saw players holding their MOPJ, which is Asian naphtha into pricing, which is going to continue to bolster the spread.
Martha recommends MOC in gasoline as her one to watch. In the east, we have seen the RON 92 gasoline MOC (market on close) flow was almost ubiquitously well bid with strong buying seen in the windows. There have been slightly contrasting flows in the paper contracts outside of this. The strong flow and sentiment have been from the sell-side, with two European trade houses selling consistently, in good volume with market makers buying the spreads well.

And the Trade Idea of the week is to go long the Q1 Euro naphtha crack. The Q1 crack has seen great support recently and rose to highs of $8.65 per barrel on December 5th. Although this seems very high compared to the almost $14 per barrel level it was trading at a couple of months ago, it remains fairly low, historically. 


Links below to Greg and Martha’s LinkedIn pages:

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

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

In this episode of our Onyx Leadership podcast series, Chief Technology Officer Ishaan Hemnani joins Onyx CEO Greg Newman to discuss the vital role of technology in the oil derivatives industry.

Ishaan is an extremely unique and rare person within the industry, having experience as Fuel Trader, before pivoting into technology and creating Bunker X, which has become the playbook for many in the oil industry. 

Ishaan and Greg discuss how they came to work together and why Ishaan chose to move over to Onyx Capital Group. Ishaan also explains how we’re using AI in the industry, and why we shouldn’t fear it as much as we do.

To learn more about Greg and Ishaan, check out their LinkedIn profiles:
Greg: https://www.linkedin.com/in/oilderivatives/
Ishaan: https://www.linkedin.com/in/ishaan-hemnani-60a02831/

A volatile market influenced by OPEC headlines is still leaving oil markets sitting anxiously in “wait and see” mode. With the anticipation surrounding the upcoming OPEC meeting, Brent crude has been oscillating around $80. The market is expecting OPEC to deepen existing cuts, with fundamentals largely skewed to the downside.

Refinery margins have been improving week on week due to crude weakness although we're seeing weakness down the barrel in the products. There was an improvement of over a dollar whilst there was weakness across most products including gasoil and EBOB. Martha explains why.

Martha recommends the LNG story as the one to watch. Origin Energy announced reduced gas supply to Australian Pacific LNG. A loaded tanker lost power, delaying LNG cargoes. Its two main customers are China's Sinopec and Japan's Kansai Electric.

Vincent has an interesting Trade Idea of the week:

Range trading Q1/Q2 MOPJ swaps

7-day ATR: 4.25

Trade between $14-18/mt

Strategy: Track the 20-day Moving Average.

Exit trade once volatility dies down. 

Links below to Greg, Martha, Vincent's LinkedIn pages: 

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

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

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

#worldofoilderivatives #oott #oil #tradeidea #oilderivatives #podcast #marketupdate

Oil market participants are anxiously in “wait and see” mode ahead of the OPEC meeting and Greg shares his presentation summarizing market sentiment over recent months.

Greg discusses the current state of oil markets, highlighting a recent sell-off in Brent crude below $90 per barrel at the beginning of Q4. The impact of the Israel-Hamas conflict and a subsequent overcorrection, led to prices briefly dropping below $80.

RINs have been weak with news of a strong soybean harvest supporting biofuel supply, renewed Russian gasoline exports and weak driving demand.

The market is now focused on OPEC's upcoming meeting and potential decisions regarding production cuts, with uncertainty about oil prices in 2024. The overall sentiment suggests a recent shift towards a bearish outlook. Greg suggests that even yesterday and this morning, we're seeing some indication that there is some opportunistic buying ahead of this meeting.

Vincent weighs with his Trade Idea of the week, to go short in the Jan/Feb Sing 0.5 spread. 

Links below to Greg and Vincent's LinkedIn pages:

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

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

In this special episode of our Onyx Leadership podcast series, hosted by Onyx Capital Group's CEO Greg Newman, we sit down with Chief Revenue Officer Miles Hempsall to discuss Miles' journey within the world of oil derivatives.  

Miles shares his ethos on building commercial success, the challenges and opportunities of creating value in research and data businesses, and his vision for the future of Onyx in this open and candid discussion.  

To watch the Video Podcast, click here https://www.youtube.com/playlist?list=PLLdOFnyMotk6cXhuBi73qO9OUcK1JPeDy

To learn more about Chief Revenue Officer, Miles Hempsall, check out his Linked In https://www.linkedin.com/in/mileshempsall/

To learn more about Chief Executive Officer, Greg Newman, check out his Linked In https://www.linkedin.com/in/oilderivatives/

 #Business #businessphilosophy #crude #oil #leadership

Onyx Research Analyst Martha Dowding joins Onyx Capital Group CEO Greg Newman for a market update, a discussion on the growth of oil demand growth (noting an increase to 4 million barrels per day despite challenges), and Martha recommends her Trade Idea of the week is to long the Q1 regrade due to shifting weather forecasts in Asia.   

Greg expresses scepticism about forecasting demand and emphasizes the significance of the supply side, particularly the commitment to U.S. shale oil production. The increasing supply trend, suggests a potential need for creative solutions like bilateral agreements to manage inventories and fill the Strategic Petroleum Reserve.

 
Link below to Greg and Martha's Linked In pages: 

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


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

The team discusses the current Brent flat price (around $83/bbl), with prices down due to concerns about China's economic situation and traders now discounting geopolitical risk. Greg, Vincent, and Martha mention a decline in managed money positions in recent weeks, contributing to an overall bearish outlook in the oil market. Vincent predicts the bullish factor in the market for Q4.
Greg expresses a lack of confidence in the direction of the crude oil market due to various factors, including OPEC's actions, while highlighting conviction in the gasoline market.
Martha brings forward her trade idea for the week. She’s been looking at gasoline recently which has seen a strong physical market in the East and Europe, with the consensus being that east is powering the market at the moment and in order to show that we are going to go long, we think the best risk reward for this is in the front 92 spread.