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"After a lesser draw than expected to crude inventories, oil is selling off on this third Wednesday in April. As strong imports from the Middle East this week should help to buoy inventories for next week's report, hark, here are five things to consider in oil markets today. " Saudi's balancing act
No this is the first time I've looked this type of relationship although I'd assume another interesting one would be Ethanol (from corn) and Gasoline due to their blending in the US.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
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I think these article could have been written much better, quoting bank analysts and consultants as if they were traders, and making what I think are confusing statements alluding to "Dated Brent"*, but I think the underlying point is both interesting and sound!
* A) "In the world of contracts for difference, which allow traders to insure price exposure for their North Sea crude shipments week-by-week, the one-week CFD spread plunged this week to minus $1.84 a barrel" - Raise your hand if you know what a CFD is and what this means? and
* B) "Glencore ... bought from ... Total SA a cargo of Brent crude at $1 a barrel below the main North Sea benchmark, the widest discount in 22 months, according to a trader monitoring deals." - aka "Dated Brent"
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
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Dated Brent is like the "Cash Brent" price. It represents the price of Brent cargoes that have specific loading dates and is the worlds mostly widely used benchmark for pricing physical crude.
When they said "Glencore ... bought from ... Total SA a cargo of Brent crude at $1 a barrel below the main North Sea benchmark" that could mean that Glencore bought a dated brent cargo at May or Jun minus $1, but it could also mean that they bought a cargo $1 below yesterdays Dated Brent price. Who knows, sort of my point that the article was unclear.
With regard to CFD's they are like "Spread Swaps" or "Floating-Floating Swaps" which settle based upon the spread between Platts Dated Brent quote and Platts Month XYZ (eg June) Brent (which is very similar to ICE's Brent Settlement). They normally have pricing periods for a calendar week and normally have a notional size of 500kb - which is also the size of a Dated Brent Cargo.
Again when they say "the one-week CFD spread plunged this week to minus $1.84 a barrel" this is very unclear as they don't identify a) which week traded or b) whether that's a discount to May or June.
