Sometimes songs encapsulate the reality show we are in. And even the name of the group, ‘Lost Frequencies,’ fits the narrative. We copy some of the lyrics: ‘Stop claiming what you own and think about the show: “We’re all playing the same game, waiting on our loan. Decisions as I go, to anywhere I flow. / Sometimes I believe, at times I’m rational. I can fly high, I can go low. / Today I got a million, / Tomorrow, I don’t know.”
An extremely unusual event happens, common sense prevails! China intends to exempt certain NGLs and petrochemicals from its retaliatory tariffs against the US. Ethane, polyethylene and propylene are now exempt, giving some hope that propane could escape too. A Chinese source confirmed to The Officials that “PE [polyethylene] and ethane from the US are exempted, while propane is not.” The ethane exemption will help those Chinese plastic factories – but propane was the bigger of the two in terms of US exports to China at nearly 400 kb/d in December and January, while ethane was only 260 kb/d in those months. But, as one Chinese source commented to The Officials, China and US rely on each other when it comes to ethane. So, with no China demand, there is no outlet for US ethane and China has no ethane resources. Also, in Asia 2.70 we referred to the two new ethylene crackers expected to use naphtha as primary feedstock but those taking in ethane will be breathing a sigh of relief. Meanwhile, Trump said Xi had called him, after waiting by the phone for some time. And we like them talking, as it helps solve problems. Hopefully, they can keep chatting and sort the whole mess out. If the trade relationship hasn’t been entirely soured by last month’s events, perhaps these will resume as usual…
There’s no lifting the foot off the gas in the North Sea, as Trafi picked up yet another trio of cargoes. But this time it’s broadened its palate and picked up one Forties from BP – a cargo for 22-24 May at Dated +$0.85. The main dish was, however, still Midland, of which Trafi collected two from Gunvor for 23-27 and 24-28 May, both at Dated +$1.85. Nine Midland cargoes in 3 sessions, plus one Forties for good measure… that’s 7 mil bbl – equivalent to 3.5 VLCCs! Ekofisk was back on the menu too, as Mitsui bid for 12-14 May at $2 over Dated, whereupon Shell swept in to hit their bid. The physical differential slipped to $1.13.
Divorces are rarely clean breaks and Kazakhstan’s policy split from OPEC has already been reined in. Kazakhstan isn’t in an easy position; while it can drill as hard as it likes and IOCs can extract enough oil to fill the Caspian Sea, Kazakhstan depends on neighbours for pipelines and export facilities. Remember the spat around the Caspian Sea SPMs that Russia temporarily blocked a couple of weeks ago! Suitably chastised, after his bombastic comments about prioritising national interests above OPEC’s famed disciplined compliance, he quickly ate humble pie and mumbled about commitment to the common good.
The avalanche accelerates! Reports that yet more OPEC+ members want to expedite the return of barrels from the June release precipitated a $1.50 flat price dump back towards the mid-$65 range. Stunned and perhaps slightly dizzy, Brent managed to re-find its feet and consolidated to close the European session at $65.64/bbl. If they’re worried about their revenues and selling at low prices, it’s odd they should reveal this now that prices were well down in the 60s. Kazakhstan opened Pandora’s Box!
“I have no intention of firing him.” We expect you can guess who’s speaking and about whom… Yes, Trump has no plans to fire the market’s darling, Powell. Not that he ever could – legally! His comments in the Oval Office last night were uncharacteristically restrained. We suppose the market’s plummet may well have whipped him into a more sober state of mind.
The US are feeling the strain as even Bessent reportedly said the tariff situation with China is “unsustainable” and he expects a tempering of hostilities. They haven’t caved in yet, but the cracks are beginning to show! He admitted the tariffs have suffocated trade potential so much that they operate effectively as an embargo and the markets liked it – rising from nearly $66.80 to $68 within half an hour! Equities liked it to and the S&P 500 surged 2.7%. But they quickly ran out of steam and fell back!
By contrast to the strong growth seen in recent weeks, in the week ending April 17th, exchange traded futures volumes fell considerably ahead of the long weekend as shown in our momentum table. After the frenetic period following Trump’s tariffs announcement, last week saw a significant risk-off move. This saw a drop of around 50% or more in most contract volumes. Gasoil contracts saw the smallest decline across all tenors.
PetroChina had its hands full today! Of course, Vitol was back, bidding hard and lifting many PC and Reliance offers. And Gunvor returned with a vengeance, lifting offers and bidding enthusiastically too – and Exxon showed more energy than we had seen for a while on the buyside, bidding alongside the dynamic duo. This congregation is a rare sight, we must say. Alongside PC on the sellside, Reliance threw in some offers but didn’t want to plunge as deep as their Chinese counterparts. BP hit the odd bid but kept its distance for the most part. Despite the buyers’ onslaught, the Dubai physical premium slipped 12c to $1.87 – kudos PC! After this clash of the titans, PC declared another Murban cargo to Vitol – that brings the April total to 24, of which 16 have gone to Vitol. Even more impressively, PC has sold 23 of those 24! The only other was from Reliance. And Murban is clearly the favoured grade now; since 14 April, it’s the only one that’s been nominated. We also notice the absence of ADNOC, what happened there?
Oil markets were walloped following last week’s war fear inspired sudden rise. But it was clear both sides, US and Iran, want to
play nice and issue friendly statements. Nevermind that the real action is in Houthiland and surrounding waters. While bombs are
dropped on Yemen, expensive American drones are also blasted out of the sky. Should they come to an agreement, surely the
Gulf neighbors won’t want any disturbances, prices are set to get whacked.
While Trump and co go about their crusade sanctioneering and blocking free movement of goods and oil, their efforts seem misplaced. Sources told us the most recent target of sanctions, Shandong Shenxing Chemical Co, had already transferred its assets and is simply a shell company. He’s got the spirit to take on China, he just keeps missing the mark!
Headlines can only go so far and the Americans can only cry wolf so many times before the market doesn’t listen anymore. Yet more threats of culling Iranian crude exports to “zero” had Brent up to over $66.70 this morning.
Even if some people are taking their foot off the gas ahead of the long weekend, that certainly wasn’t the case in this morning’s extra early Dubai window. Of course, it was Vitol making the most noise and lifting PetroChina offers all over the shop. If PC had a stall at the market, Vitol would have picked up the whole thing and walked off with it while PC’s back was turned hitting Gunvor and Totsa bids. This saw Vitol earn another 2 convergences with PC – which declared 2 Murban cargoes. But even that wasn’t enough for Vitol, which also went after Hengli and BP offers – Reliance also got caught in Vitol’s rampage. Even so, the premium slipped 10c to $1.90 today.
The Jakarta futures exchange will use The Officials Brent Index (OBI) assessments to settle futures contracts. The listing is targeted to start in July 2025. Please see link: https://www.linkedin.com/feed/update/urn:li:activity:7318195273757855744/
We said in this morning’s Asia report that a 245% tariff on Chinese goods would essentially be an embargo, but now Trump reportedly wants to enforce an actual embargo. Reports suggest the US wants to negotiate over 70 nations into not accepting Chinese good shipments passing through their ports. Do not underestimate the significance of this: it would hit almost all commodity markets – copper would be whacked, petchem demand would get torpedoed and oil demand would be gravely stunted. Trump loves building walls – unfortunately this one is a brick wall in the road of economic development. The more likely result, however, is that Trump is laughed off for the ludicrous suggestion this is.
245% tariffs… I have a bigger stick than you. It sounds scary, but who really cares? China-US trade is already dead as a dodo and 245% would essentially be an embargo. Maybe Trump’s just increasing the number, until it reaches the White House phone number and Xi will finally get the hint and call him to make a deal.
The financial market meltdown that had been tearing through the world over the past couple of weeks seems to have abated somewhat. Equity and bond markets both calmed down as Donald showed a rare glimpse of restraint. Is he ok? US equities managed to hold their recent gains having bounced off the Trump tariff lows of last Monday and the 10-year treasury yield firmed up to around 4.31%. Still elevated above April’s lows, but nevertheless moving in the right direction for Donald’s debt
The market is tired… and who can blame it. It’s been a rollercoaster couple of weeks. At least the tariff reprieve has given investors a moment’s pause to gather their thoughts. Brent even managed a second consecutive daily change of less than a buck! It ended the European session at $64.50/bbl down.
In keeping with the robust growth seen last week, exchange traded futures volumes across contracts and tenors showed a material increase in the week ending 11th April as seen in our momentum table. Elevated volatility among rising tariff concerns, recessionary risks and OPEC supply release saw Brent futures volumes growing dramatically last week. For the June tenor, WTI contracts experienced the greatest rise at 42%, while the July and August tenors saw the gasoil contract climb the most by 60% and 46% respectively.
An onslaught of Murban! After declaring 2 Murban cargoes to Vitol yesterday, PetroChina declared another pair to Vitol today. But that wasn’t all! Gunvor and Exxon both earned themselves a convergence with the Chinese mega seller today and PC granted each of them a Murban convergence as well. That was Exxon’s first of the month and April’s total convergence tally now stands at 18 cargoes, all from PetroChina – of which 12 to Vitol.
48 mil bbl! Mega! A huge set of Saudi allocations to Chinese refiners. A record breaker in fact, at least since The Officials publication began in June 2024. That’s a lot of crude shifting to the East. Rongsheng got the biggest share with a 15 mil bbl allocation but it was Unipec’s monthly change that grabs the eye: from only 3 mil bbl in April, they’ve surged to 14 mil bbl for May!
More forecasters are bringing down their price expectations. The latest was Golman Sachs who is seeing Brent averaging at $63/bbl over the rest of this year. The weight of the tariff dislocations will lower US’ GDP by 1.4% as seen by The Havard Business Review. This will naturally result in potentially less demand for oil while OPEC is boosting output. Team Trump appeared to want to soothe some worries and massage the market’s angst. But it has royally backfired as Lutnick’s comments on recategorization of tariffs by sector has poured gasoline onto the bonfire of confidence in American policy. First, Apple was surely kicking itself for chartering hundreds of tonnes of iPhones from India into the US to escape the tariffs before electronics were granted an exemption. Then, others were probably wishing they’d copied that move as Lutnick revealed a whole new way of categorising and segmenting tariffs into “buckets” that simply compounds the chaos of the original announcements. Talk of buckets makes us think of a child at the beach building a sandcastle to protect himself from the rising tide…
Things are getting ugly, folks! Angola just got whacked with a $200 million margin call by JP Morgan. The landslide begins with small stones and ends with the whole mountain collapsing… Even so, Team Trump continues to insist that the tariff plan is going well and the economy will be bouncing once the teething problems pass. Yeah, right… US Energy Secretary, Chris Wright, is wearing a tin hat, oblivious to reality. He called the market’s panic “misplaced”. But listen to him and you’ll hear that the long-term oil demand growth outlook is unchanged – get your head out of the sand!
The Asians were in a good mood this morning and the positive vibes spread to flat price, which rose from barely $63 at the open to above $64.30. But then China got fed up and slapped the US with 125% tariffs and prices fell back by $1! Multi-dollar swings within minutes are becoming the norm… Get to safety! Gold is flying and hit a new all-time high of over $3230/troy ounce this morning. Talking of flying, capital is taking flight from the US as investors panic about Trump tantrums and the bond market is in a full rout – see more on the next page!
Don’t worry everyone! It’s all “going to work out very well”. The man said so… And yet the Trumpster is pushing his enemies to make friends with his former friends. The EU and China are beginning negotiations to abolish tariff son Chinese EVs. How will Germany’s car industry survive an onslaught of cheap, competitive Chinese EVs without the protection of a nice tariff blanket? BMW, Mercedes-Benz and Volkswagen are surely quaking in their boots right now! They’re also still smacked with Trump’s 25% auto tariffs… International relations are all about tariff negotiations now. And promises to buy more US energy products keep raining down from countries keen to avoid tariffs. But US supply is being pulled in all directions! Domestic demand is growing, up over 1.7% y/y YTD, according to The Officials calculations based on EIA data, while the most recent data (referring to January) shows exports of crude and products down over 1% y/y and Kpler saw crude exports down nearly 4% YTD. As production is lacklustre and domestic demand is growing, where does Trump hope to find the extra slack to boost exports? It’s not like he can just drain the SPR to sell that abroad, as Cushing inventories are down almost 34% from their 5-year average – and that wouldn’t be popular anyway.
The ‘Trump indicator’ (also known as flat price) went on a barnstorming rally last night after the 90-day reciprocal tariff delay. Trading with Trump is like playing poker with somebody who goes all in on every hand and then suddenly folds when he realises just how close to the cliff he’s teetering. As long ago as… Tuesday… Trump rebuffed questions about tariff pauses to allow negotiations for reconciliation. Until Wednesday afternoon!
The Blink that Shook the World! Trump pauses most tariffs except against China. And Trump’s blink triggered massive short covering across markets from oil to equities. Trump wanted to buy the dip! “THIS IS A GREAT TIME TO BUY!!!” He told followers earlier today. He’s been spanked by the bond and equity market and to be fair by his moneyed followers who have lost trillions with his attack on free trade. The 90-day delay to the reciprocal tariffs (at 10%) made the market bounce – regardless of the upped tariffs on China to 125%. Brent jumped back up to $64.50 and US equities surged. There have been lots of bids buying the dip this week. However, nobody in the North Sea window wanted to do the same and we didn’t see a single bid! Nor was there an offer.
Folks, we crashed through to the FIFTIES!!! It finally happened! The first time since February 2021. Serious times ahead as the market signals a collapse in demand not oil but anything else! A trade war is a disaster for everybody. The front spread fell to 34c briefly this morning but after the September tenor, the structure fell into contango! It only took a global trade war of colossal scale kicked off by one man’s whimsy and fancy to smash the global economy! And China hit back with 84% tariffs on the US today.
Boing!! Markets bounced today as Trump kept his mouth shut for most of it. No more Truth tirades rampaging about 1000% tariffs on everything coming into the US. And guess what! The economy enjoyed the calm: the S&P 500 surged over 4% at its peak and Nasdaq 100 jumped 4.4% but both pared their gains in the afternoon, as the White House said the additional 50% tariffs on China come into effect at midnight EST.
For the week ending 4th April, our momentum table shows all contracts across tenors seeing robust growth in exchange traded volumes amid Trump’s tariffs and OPEC’s voluntary cut unwind from May. RBOB contracts increased the most, especially for the July and August tenors with 190% and 171% growth respectively. Of all contracts in the momentum table, June Brent saw the smallest increase, but still rose by 66.84%.
The selloff finally takes a breather. After a 3-day massacre that had the bloodbath overflowing and flooding the bathroom, markets finally stabilised. From gold to oil via equities, markets are trying to find their feet. Brent steadied to close at $64.11/bbl, while equity markets bounced marginally.
‘If we fight, I might lose a leg but that’s ok because you’ll lose an arm and a leg’. This seems to sum up Trump’s approach to the world economy. But really, everyone’s losing their heads. Markets have been in chaos today, look no further than credit markets, where 10-year treasury yields traded in a wider range than in the entirety of March. Traders are battling against recessionary fears and tariff reproachment, headline by headline. But after all is said and done, China are unlikely to yield. According to our market sources, they expect no reproachment, China have had enough and an additional increase of 50% makes no difference this time. We can’t help but agree. China’s taken steady steps to depend less on exports to the US… But for the Donald, obviously, it’s worth it as your opponent loses more, who cares if your own economy is pounded and pummelled – they lose! Actually, we all lose!
It is Armageddon day! Global collapse and the world are facing an implosion in equity markets, commodities, hedge funds margin calls, name anything if values from houses to currency in your pocket and everybody is wondering what happened to the value of all those things. Even gold got hit, down 0.8%. Copper, the bell weather of the economy got spanked hard, down 5% today. Trump tariffs triggered a global equity market collapse from Japan to Canada and everywhere between. Trillions of dollars evaporated in the rout. We are not to side with Bill Ackman, a controversial hedge fund manager and a fervent Trump anything lover. But even he called for a 90-day tariff pause fearing ‘a nuclear economic winter.’ We think we’re still in the middle of the mushroom and pity those facing margin calls. According to sources across FX, Equity and Rates, “liquidity is poor leading to instances of price over shoots.” Investment grade credit remains fairly orderly but high-yield is becoming extremely volatile.
10 dollars down in 2 days! The power of market pricing in the collapse in global trade. China’s bold retaliation delivered the coup d’grace and the flat price expired. We know it can be temporary if the grown-ups ask questions and say, what are we doing, we are all tied in. In the meantime, 50s is not out of question. The impact on the Gulf economies is severe and all hands should be on deck not to paint rosy demand pictures but to have serious chats with the US and its trading partners.
It is bad, really bad. Wars of any kind including trade wars leave heaps of casualties in their wake. In this case, depleted
consumers, shutdown manufacturers, trucking and shipping companies and chip manufacturers, one of the main US exports to
China. The size of trade is huge and more details in the next section.
But in the meantime, oil got whacked! Down, down, down it goes. We are firmly in the 60s territory. Just as flat price gets
whacked with one bearish headline, another one emerges. Tariffs, OPEC, retaliation. From a $75 handle at the start of April
we’re now down almost $10/bbl! It’s brutal out there folks, recession fears are growing, and China just announced a hefty 34%
reciprocal tariff on all US goods from April 10! No crude, oil product, LNG or any other commodity type will go from the US to
China. China is the world’s biggest seaborne crude importer and flow US-China is now firmly shut! The US trade deficit with
China last year was near $300 billion! Up 5.8% y/y – the US needs China more than the other way around…
The 60s are back! The market didn’t just fall at the open but kept going all the way to under $70! For the first time since 19 March. So, what triggered the price collapse in oil and equities? Oil was let off easily with crude from Canada and Mexico entering tariff free as per normal. So, longs hoping for mayhem exited to the left and tumbled down the stairs. And on equities, they got more punishment than they thought; seeing the upcoming global slowdown they sold off ahead of time. Actually, things are very messy and it has a feel of a bunch of real amateurs running the circus. Trump spilled blood on Wall Street and now he’s back to his aim of cheap oil! With a bit of help from OPEC even…
As The Officials keep saying, along with every respected economist, tariffs are not good for the economy! Today, the world and its people will become poorer, and Tariff Man will eventually understand the people he promised to protect will end up paying the price of his hubris. And the administration published some clearly erroneous tariff numbers as justification. They added the import value and divide by the export value which leads not to tariff rates but crazy numbers. It doesn’t seem a great way to manage major economic policy… For China, for example, the additional 34% rate, equals the US deficit with China of $291.9 billion, divided by total imports from China of $433.8 billion, then divided by 2 again!
It’s coming. Not He but the Tariff Man! At last we’ll know who’s getting hit by what. And how much. Or maybe things will change again immediately after the press conference. To be upfront, we were confused what was actually in place preceding the set of tariffs. So much has been done and immediately undone. Keep an eye on @OnyxOfficials X page as we cover proceedings live.
