A turn around in oil markets coincided with some supportive narratives on the barrel counting side and the hope that the worst is over for Chinese demand, well, let me tell you something…
Oil Physical
From the darkness of a Japanese sell of to a bidding war in the Dated Brent structure that left global diffs with their thumb up their asses. Dated Brent tightness is self propelled, chiefly driven by low paper volumes which makes the whole derivatives complex trade like a shitcoin, DFL, CFDs all trading in a wide range from barely positive and flirting with contango to the strongest in months, not paying attention to flat prices.
The usual stuff, WAF overhang in Angola and Nigeria, a couple of unsold barrels in Brazil and WTI is too goddamn expensive to land anywhere. One would think that with a flat..ish structure and with freight this cheap buyers will step in in droves, not seing that yet. In the Middle East we are still awaiting for Aramco term allocation but sources tell me I should be happy, no, content, he said content, so I estimate 100% Terms plus a couple of spots VLCCs handsomly priced to China. They are already lifting 50% more from Saudi in August.
We’ll see last minute deals on the Middle East, because so far, barrels ain’t moving
A storm of light sweet WTI is expected to hit the waters… where are you going to put all of these barrels? Good luck trying to place that into the Brent window cowboy!
блядь! Chinese Teapots are swithching to Iranian which is a couple of bucks cheaper than Urals and much cheaper than ESPO.. Shangdong independents need to scrap every penny they can, margins are quite poor and they have the CCP breathing on their neck
Paper Markets
Lots of action here, where battles are fought. Volatility around the pricing benchmark and the contract roll all in the midst of a "financial turmoil" that it wasn't. Only a few braves in the market. We need to let the dust settle to find confort.
Look at these things..
The difference between Dubai and Brent, again climbing up.. no Atlantic barrel for you I guess.
Products
On the products front, things aren't looking half bad in the US, we had a continuous stock draws for gasoline and diesel that kept momentum ging, while refi runs are hitting 90% (some problems in the Midwest but still..), demand seems steady for gasoline and all the arbs from EU are shut. Some excess gasoline is finding its way down to Latam keeping the pipes flowing.
Asian cracks staged a recovery and was inmediately sold, man, that's getting ugly, if yu can make money with oil sub 80.. jeezz
The sun is setting for the summer season and despite the positive flight numbers we enter the last leg of travel seasson with the tanks full of Jet. Bad for diesel coming into the seasonal switch.
Tankers
We don’t talk about it
The verdict
So we are near the bottom of the long standing trading range, but with fundamentals rapidly deteriorating.
Is going to bounce to the mid 80 on the back of the Dated Brent Paper strength? Or is it going to resume the downward trend already settled?
The answer is: Yes