Finally, the Economy! | S6 E16

World of Oil Derivatives

Brent Futures have made a notable climb since last week, hitting $89/bbl on Tuesday morning. It's crucial to analyse the impact of recent developments on oil demand. Notably, both China and the USA have seen expansions in manufacturing activity, marking significant milestones. What has been the impact of headlines regarding tighter supply and the possible contagion of geopolitical turmoil in the Middle East?

Examining the refinery margin, we observed a supportive trend in the Dated market. However, product stagnation ahead of Easter also weighed down on the margin. EBOB and gasoil have experienced declines week-on-week, signalling potential shifts in market dynamics.

Macro news headlines paint a picture of resilience and growth, with manufacturing data showing surprising strength from both China and the U.S. The inflation outlook remains stable, with no concerns stemming from recent U.S. PCE data. Additionally, the US Dollar and gold continue their upward trajectory, while equities display a remarkable bullish trend reminiscent of 1989. Key data releases to watch out for this week include European CPI on Wednesday and U.S. payrolls on Friday, which could offer valuable insights into future market movements.

In our "Googling Oil" segment the team focus on Mexico's decision to halt some oil exports, which could significantly impact the global market. Pemex has cancelled contracts to supply its flagship Maya crude oil to refiners in the US, Europe, and Asia. This strategic move aims to prioritize domestic gasoline and diesel production ahead of the June 2 presidential election. With Mexico typically exporting around 600,000 barrels a day of Maya crude oil, this decision reverberates across the oil landscape, highlighting the intricate balance between geopolitical strategies and market dynamics.

The Trade Idea for this week is to buy the May/Jun DFL roll. You can watch this trade idea in further detail here: https://youtu.be/CVHxPCROTV0

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
0:39 This week in trading
4:42 Macro market news
8:11 Refinery margins
11:35 Russian oil/refineries
13:53 Light ends
15:47 Ones to watch
23:10 "Googling oil:" world oil news
29:20 Trade idea of the week
33:35 Poll results and outro