Trade and Commodity Finance
Energy Commodities
Trading Margarita Brouwer-Boulankova September 2018
36th USAEE/IAEE North American Conference
2
Key Message
Crude and refined products are the largest traded commodities in the
world by volume and value
US production is growing & the US is increasingly playing a large role
as a Global Trader
The Market has evolved and dynamics are changing rapidly especially
in recent years
Financial players are changing the trading environment from a
traditional fundamental supply & demand focus to more opportunistic
and short-term event driven trading
3
Who are the Traders
Physical Trader
Financial Trader
Moving Physical Commodity
Speculative Trading
4
Commodities in the Supply Chain
End
Market
Crude Oil
Storage /
Terminaling
Refining
Export
Exploration &
Production
Truck
Pipeline
Rail
Barge
Tanker
Refined Products
Storage /
Terminaling
Truck
Pipeline
Rail
Barge
Tanker
Trading and Hedging Trading and Hedging
5
Global Crude Oil & Liquids Production
USA 18%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
10
20
30
40
50
60
70
80
90
100
110
2010 2011 2012 2013 2014 2015 2016 2017 2018 F
Crude Oil & Liquids production
Global USA Russia Saudi Arabia (crude)
Iraq (crude) China Canada USA %
Source: EIA
1,000,000 bbls
per day
6
Crude Oil Import to the US
Source: EIA
Total
OPEC
Non-OPEC
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
10.000
2010 2011 2012 2013 2014 2015 2016 2017
US Crude Oil Import
Persian Gulf Saudia Arabia Venezuela Iraq Canada
Mexico Columbia Total OPEC Non-OPEC
14% decline since 2010
1,000 bbls per day
7
Crude Oil Export from the US
Total
0
200
400
600
800
1.000
1.200
2010 2011 2012 2013 2014 2015 2016 2017
US Crude Oil Exports
Canada China UK The Netherlands Korea Other Total
Source: EIA
1,000 bbls per day
8
Refined Products Export from the US
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
2000 2010 2011 2012 2013 2014 2015 2016 2017
US Refined Products (liquid) Exports
Other Liquids (excl. LNGs) Renewables (incl. Ethanol) Gasoline
Jet Fuel Distillate Total Export
Finished Petroleum products
Source: EIA
1,000 bbls per day
9
US as the Global Trading Partner 10 years Ago Imports / Exports from selected key regions
Crude imports
Crude imports (larger volumes)
Refined products imports
Crude exports
Refined Products exports Source: EIA
10
US as the Global Trading Partner Today Imports / Exports from selected key regions
Crude imports
Crude imports (larger volumes)
Refined products imports
Crude exports
Refined Products exports Source: EIA
11
Contango vs Backwardation
0
10
20
30
40
50
60
70
80
90
100
-5
-4
-3
-2
-1
0
1
2
Nov-13 Jun-14 Jan-15 Aug-15 Mar-16 Oct-16 May-17 Dec-17 Jul-18
WTI 6-months Forward Curve
6 months Spread (Oct 18 vs Apr 19) WTI Oct 18
Backwardation
Hurricane
Harvey
Production cut
Price collapse
Booming US shale production
Weak demand
WTI
$ per bbl
Spread
$ per bbl
Pipeline
disruption
Contango
12
WTI-Brent Spread
0
20
40
60
80
100
120
Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18
WTI-Brent Spread
WTI Nov 18 Brent Nov 18 Spread
Hurricane
Harvey
Pipeline
disruption
Export ban
lifted
$ per bbl