Searching for Macro Themes | S6 E04

World of Oil Derivatives

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