Digest

  • Kick the can

    Kick the can Cover image Published 15 Mar 2019 by
    It has been a tough slog for crude traders over the past few months, especially as much of the speculative community has sat on the sidelines watching as oil has rallied by 35% off its lows. At IP Week in London in late February, it was our sense that everyone was bullish but no one was long, and..

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  • Wag the tail risk

    Wag the tail risk Cover image Published 8 Mar 2019 by
    In the last few weeks, the main question being asked of us in the macro space is: if the physical crude market is really so tight, then why are prompt Brent spreads and the entire WTI curve still in contango? The lack of proper backwardation in either benchmark has been a mental hurdle for many a..

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  • Seeing is believing

    Seeing is believing Cover image Published 1 Mar 2019 by
    Crude’s 3.5% intraday price drop this week triggered by Donald Trump’s tweet jawboning OPEC underlines exactly why trading crude has been so challenging lately. With very thin liquidity, given that much of the oil world was at IP week in London, there was no one to take the other side of the sell..

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  • Crude complacency

    Crude complacency Cover image Published 22 Feb 2019 by
    Clients are increasingly asking us whether we are bullish or bearish on oil, to which our response generally has been ‘yes’. The physical crude market continues to exhibit a strength that many physical traders have described as ‘unprecedented’, given the sanctions on Iran and Venezuela, alongside..

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  • Everything bullish except flat price

    Everything bullish except flat price Cover image Published 15 Feb 2019 by
    The physical crude oil market continues to surge despite the indifference from the financial markets. This week, sour crude markets rallied impressively as refiners continue to scramble to secure barrels, in part due to the dislocations caused most recently by the US sanctions on Venezuela, but m..

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  • Crude consolidation

    Crude consolidation Cover image Published 8 Feb 2019 by
    The rally in both crude and equities to start the year has been met by a healthy dose of scepticism for the most part. Any boost from the dovish pivot by the Fed has been short-lived and failed to solidify the rebound in equities. Moreover, risk assets are moving counterintuitively as a consequen..

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  • Everything is awesome

    Everything is awesome Cover image Published 1 Feb 2019 by
    Fed Chairman Jay Powell surprised the market (and us) this week when he emphasised that the next policy rate move could be either up or down, and simultaneously expressed an accommodative stance on ending balance sheet reduction sooner than had been previously communicated. This came just a littl..

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  • Quality control

    Quality control Cover image Published 25 Jan 2019 by
    The negativity at the end of 2018 was palpable for all risk assets, not just for crude. But we are still struck by the indifference of traders and the lack of uplift in flat price relative to the material tightening that is taking place in the physical oil market right now, which we noted in Pers..

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  • Gamma said knock you out

    Gamma said knock you out Cover image Published 11 Jan 2019 by
    Please note that we will not publish a Macro Digest next week, as we will be visiting clients in Texas. The next Digest will hit your inboxes on 25 January. In the meantime, e-mail alerts will be published as required, and please reach out if you have any questions or comments.After the dramatic..

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  • A dove with claws

    A dove with claws Cover image Published 14 Dec 2018 by
    Please note that this is the final Macro Digest of 2018. Normal service will resume on 11 January. We wish our readers a prosperous 2019!Two of our three ‘great expectations’ events, which we wrote about two weeks ago (see Macro Digest: Great expectations, 30 November 2018), have resulted in outc..

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  • Great expectations

    Great expectations Cover image Published 30 Nov 2018 by
    Donald Trump seems to be caught in a time warp. Or perhaps he is suffering from muscle memory in his brain from the countless Wall Street Journal op-eds he read during the 1980s. Because thinking from that era would appear to be fuelling his policy imperatives this year: Iran is bad, interest rat..

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  • Nuance is dead

    Nuance is dead Cover image Published 16 Nov 2018 by
    Please note that, owing to the Thanksgiving holiday, there will be no Macro Digest next week. When positions are being liquidated, there is no such thing as nuance. And this week the oil market was capitulating, as evidenced by the three-standard deviation jump in volatility, one of the larg..

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  • Widespread panic

    Widespread panic Cover image Published 9 Nov 2018 by
    Investors continued to shed long positions in crude this week as WTI finished down for its ninth consecutive day on Thursday, the first time that has happened since July 2014. Should Friday close in the red, it will mark the first time in over two decades that crude has closed lower for 10 consec..

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  • Going for the jugular

    Going for the jugular Cover image Published 2 Nov 2018 by
    The capitulation in crude oil continued this week as both flat price and spreads tumbled for the third straight week. Even on days when equities bounced as they tried to find a floor, crude continued to sell off, driven in large part by the weakness in timespreads. The 9% October sell-off in Bren..

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  • Is the reflation bubble bursting?

    Is the reflation bubble bursting? Cover image Published 26 Oct 2018 by
    Risk assets tumbled yet again this week due to a combination of spiking volatility, earnings that failed to live up to overly inflated expectations, and a weak US Treasury auction that stoked fears that China is pulling back on its purchases as a consequence of the trade war. Meanwhile, correlati..

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