Oil commentary - 28 August 2023

Morning all and I hope everyone had a lovely weekend. Shhhhh, can you hear that? No, not the sound of umbrella’s being popped up in the UK, getting ready for a soggy BBQ on the last bank holiday before Christmas (you had to say it, Stanley!), No, it’s not the sound of Donald Trump getting ready for another mugshot either. No, it is the sound of silence, because today, in the UAE at least, the kids have gone back to school. Bliss. Talking of other things that are quiet – let’s talk oil, shall we? Brent is trading this morning at $84.53 up 0.05 and WTi is trading up 0.11 at $79.94. Much where it has all month, really. One part of the barrel that hasn’t stayed at levels it was though, is gasoil. Or diesel, to the uninitiated. ICE Gasoil futures in Europe (the benchmark amongst which all other parts gasoily base themselves off) have surged in the last month – this time last month they were trading at $874 per metric ton. Today they are trading at $951 per metric ton. An increase of $77 per metric ton. Or, to put into a more readable context, $10.33 per barrel. Or, if you’re an end user filling up a truck, that equates to around that’s about 5 of your favourite British pence. That’s a lot and here is the thing about oil markets – a lot of can get swallowed up in jargon, or people overcomplicating things meaning that a person who doesn’t wake up in the morning and thinks “oooh nice, another day centred around hydrocarbons” (I’m not looking at you here Greta BTW, or maybe I am?? Hmm, interesting) and the story gets lost. That is until said person gets to a petrol station, fills up said vehicle, looks at the bill and says, “but but but, I thought things were steady?!!?”. That person, ultimately, drives demand - when things get more expensive, people reel in spending, so the diesel story is a very interesting one, and as I have been saying all year, one to watch. It’s very easy for an oil trader to speak to another trader and say, “well yeah of course, gasoil cracks have roofed”, but most people who use the fuel wouldn’t know what the bloomin heck you’re talking about. Lots to keep an eye on this week so keep your eyes on the headlines. To all those in the UK – enjoy the bank holiday. Good day, and week to all.