Random Musings....

SMCJB 

Random Musings....

I love how clear the direction is priced in here.

Thinking on the importance of central bank policy in the oil market: I think the dovish outlook of the Fed and ECB should put a floor in crude priced in dollars and euros (I am sure somewhere in the world crude is priced in euros) for the next year. I am relying on the policy/oil price dynamics over the last couple of years only, therefore would trust those who know more about history than I but this is my take on things.
I realize I'm making some big assumptions with this statement such as the certainty that central banks will cut rates, that lower rates will lead to a more inflationary environment and a weaker currency, the supply of crude will remain relatively stable (higher US production offsetting OPEC cuts) and demand will also remain stable or slightly decrease.

Edit: I just realized in my journal, today I posted a reason for lower oil prices. I would say there are reasons for oil to go higher and lower this year, however I would lean toward higher as stated in this post.

Does anybody know the significance of 2:30pm in the crude oil market? Seems like volume/price action picks up going into 2:30 then significantly tapers. I know the pits used to close then but maybe there is something else also.

blackgrey45 

Does anybody know the significance of 2:30pm in the crude oil market? Seems like volume/price action picks up going into 2:30 then significantly tapers. I know the pits used to close then but maybe there is something else also.

Crude settles at this time.

https://www.cmegroup.com/confluence/display/EPICSANDBOX/NYMEX+Crude+Oil

I feel like crude is being pushed up and down at the same time and price is just kind of found a good equilibrium in the low 70s. Conflict in the Middle East and the possibility of rate cuts supporting the price here offsetting supply/demand aspects in the market.

Does anybody trade crude between 2:30pm and 5pm? There has been some 30-40 tick moves on some days the last couple of weeks.

SMCJB 

Random Musings....

And it continues. Between 8/1/23 and 1/30/24 CLM24 moved up just 11c while CLZ33 moved up overly $11! (Good luck trying to trade that though!)

Interesting thread...

1. short 🧵

I think what we are seeing is the oil world separating into two regions, West of Suez (Atlantic Basin) and East of Suez with little transferring between the two especially when Russian crude comes back and stays in the West

2. Dangote is a big part of this as it means less gasoil needed from the East into the West. Less gasoil demand in NWE.

Atlantic Basin is basically self sufficient especially with Guyana and in the future Namibia come on line.

ME will feed India and North East Asia.

3. that makes Platts Dated Brent decision for WTI a truely poor one. Brent/WTI will be an Atlantic basin price while something other than Dubai will grow in the East.

If they had played it differently dated Brent could have been the global benchmark over both zones.

4. It is likely that some new refineries will be built East of Suez such as Indonesia and India and Vhina likely to build less than they thought (demographics).

Atlantic basin will see flows change, mainly from Dangote which will mean less product flows from east of suez.

5. Flows through Suez are going to significantly reduced. I think Saudi Arabia may be seeing the same flow changes. US stopped due to Saudi decisions. Europe may stop just because of the availability of crude in the Atlantic basin.

6. Not everything will stop flowing but it will be significantly reduced.

I think this was prompted by this news story
Bloomberg :- Nigeria’s Mega Refinery Dangote Turns to US Oil

SMCJB 

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The thread is back up. The error was caused by a URL link in @SMCJB's post. I have the text stored, SMCJB, but for now have set your post to "." only.

Let me troubleshoot more. In meantime, don't repost that link (I think it was the archive link that did it, but need to confirm).

Mike