Onyx Capital Group’s Post

Transcript

The trade for us is short the margin and long the DFL. I was speaking about this graph quite laws. Not only does it keep me in touch with what's happening in the product markets, but also the relationship between or refinery margins. So that is the orange line and the DFL can be quite interesting especially when we're getting to kind of pivotal point in the year where we're coming out of maintenance and typically into season where you should get. Decent product bonds, this recovery in margins, it makes sense when we're in maintenance. So you're just getting less products out whatever like the cracks are supporting. Putting this margin, but now we're getting an instance where the DFL is also selling off and that's further supporting the margin. So for me as we go into higher run rates that I expect this relationship to flip as we mentioned in the last couple of weeks ago in the last call, like probably like a simple summer margin, so as we like gasoline. Effectively selling the straight run products for which the CD margins super high. So I think that makes sense. The crude picks like crude demand picks up. So the DFR perform. Yeah. And and the the simple margins come off. Yeah, exactly. So I think we can also have an instance where the crack holds and the DFL rallies. So the margin probably won't move, but the DFL will move, if that makes sense. I mean, I think there's scope for the simple products to come off as well. Particularly when you look at those charts as well, like we're coming out of a period or potentially coming out of a period where we've had exceptionally high refining margins due to like war disruptions. Yeah, with Russia like so if if we had, if we're heading into a more normal kind of period for refinery margins then then actually the last years maybe aren't that reflective of. Of where they could go. So no, it'll be interesting. I do think to be honest, the main mover should be included. I totally agree. The only caveat is if. You know, if Russia you create the slash Ukraine situation gets resolved and there's all of a sudden a huge influx of crude, but is there enough space for that in the market? But then in that scenario as well, then you'd potentially also have like a normalization. I mean, there's different scenarios and how things get resolved and does keep sanctions on or not. But potentially you have in that scenario, you also may have maybe have an influx of Russian products as well back onto the market. So that may pressure the margin from the product. That's yeah, that is true. So. I mean, I, I don't think anything is going to be resolved, to be honest in the next two weeks. So I think for now I feel fairly comfortable that yeah, the trade for us is short the margin and long the DFL.