Richard Rawlinson

Oil - Physical V Futures - Just how wide is this 'gulf' and what is the current price dislocation?

Recommended Posts

Last week I wrote on LinkedIn¬†about the current¬†#Physical V #Futures divide¬†in #OilMarkets.¬†ūüõĘ ūüďä Here it is:¬†

‚óŹ Dated Brent, which prices more than half the world's physical crude traded down¬†to a record discount to #BrentFutures of around¬†$10bbl.
‚óŹ Physical dated Brent was pricing at $15bbl only Wednesday last week (2nd April)
‚óŹ Middle East benchmarks also fell¬†to all-time lows.
‚óŹ DME - Oman's discount to Dubai swaps was $7.24bbl and¬†physical Dubai's discount to swaps was $8.60bbl
‚óŹ Whatever oil producers decide on #Supply;¬†#DemandDecimation from global lockdown and reduced global output¬†is so vast¬†the world¬†will soon physically run out of storage space.
‚󏬆DemandDecimation¬†is 20m+ bpd, or roughly a third of daily demand in 2019.
‚óŹ #Futures rallied solely on the back of a Trump tweet - when he hadn't even spoken to the revelvent Russia parties.¬†

This shows just how much media and headlines can drive futures pricing. #Influencer

Never in history has the power over so many been in the hands of so few.

OPEC+ meeting next week (over the phone) has now been pushed back to Thursday 9th April and Saudi Aramco has delayed, for the second time in two months, its pricing that usually comes out on the 5th of every month. This can affect up to 14million barrels as others often follow their lead(er)...

If Saudi do cut to pre Covid levels, circa 9m bpd and Russia agree to the OPEC + pre covid request to scale back 500k of production then this 3mill bpd reduction will have little effect on continued #OverSupply & #UnderDemand. 

What we also need to know is; A, are the US producers willing to scale back? B, by how much? Or C, can they actually agree to this under their differing State V Federal laws on collusion?

"The divide between physical reality and the hope for a better future is at a record high".

#Goodluck & #StaySafe

#onyxinsight #markets #oiltrading #energy #Commodities #trading #oil #swaps
Onyx Advisory

  • Upvote 1

Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.