Oil market in the new world
On the 19th April, Vortexa’s Market Analysis team came together to discuss oil & gas market dynamics in an environment of unseen uncertainty.
The session covered discussion points across the barrel, including:
- Review of Russian exports – levels and destinations
- Putting the recent freight price improvements into perspective
- China and OPEC+ highlights
- Sustainability of diesel crack strength
- Brief comments on fuel oil and LNG
- Bull and bear signals
So far flow changes related to Russia are limited.
- Europe takes less Russian crude, but India/Asia largely compensates
- Diesel exports continue to flow into Europe for now
- There are indications for a trend reversal to higher exports again led by fuel oil and crude
- STS activities are on the rise, helping to mask the origin of Russian dirty barrels and improving logistics for long haul shipments.
Potential pricing trends:
- Record diesel cracks appear to lack fundamental support fully justifying their strength. Strong US exports and some upside in other markets may well help to cool prices
- Crude looks to have good chances to appreciate (outright, time spreads and diffs), given how weak the market looks right now, and that there is still upside to demand over the coming months
- The outlook for LNG and fuel oil remains strong, but records may be behind us for some time
- There is some life in freight rates (finally), supported by rising tonne miles in smaller segments, but also reason to stay cautious