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One of the world’s biggest commodity traders, Trafigura, was the largest exporter of U.S. crude oil and condensate over the past year, its CEO Jeremy Weir said on Tuesday.
Trafigura wants to capitalize on its infrastructure in the United States and is actively aggregating oil and condensate volumes from independent producers, Weir told a company briefing, as carried by Reuters.
While betting big on the rising U.S. oil production, Trafigura is looking to avoid the more burdensome and tighter commodity derivative trading regulations in Europe that come with the Markets in Financial Instruments Directive (MiFID II).
So the trading house, which handles more than 5.2 million barrels of oil and petroleum products per day, has moved its hedging operations out of Europe and into the United States, Asia, and other locations.
“We moved our hedging business away from Europe into the U.S. and Singapore and other locations,” Reuters quoted Trafigura CFO Christophe Salmon as saying at the same event.
For oil futures trading, MiFID II imposes tighter limits on positions to keep any one trader from having a very large position and therefore an undue influence over the futures market.
Trafigura has been one of the most outspoken critics of the new MiFID II regulations in Europe, arguing that unnecessarily complex regulations would push derivatives trading away from the Continent.
In oil trading in the United States, Trafigura says in its 2018 corporate brochure that its minority interest and exclusive commercial rights at the Buckeye Texas Partners (BTP) Corpus Christi terminal on the Texas Gulf Coast position it as a key player in the U.S. crude export market.Related: Colombia’s Fracking Dilemma
Earlier this year, Trafigura signed a long-term agreement to transport 300,000 bpd from the Permian to Corpus Christi via a pipeline expected to be operational in Q3 2019.
Speaking at the briefing today, Trafigura’s CEO Weir and the co-head of market risk, Ben Luckock, expressed bullish views on oil in the medium term because the world will need more oil and there is shortage of new large-scale projects.
“Peak demand is a long, long way away in the future. Shale oil is not a panacea for global oil production,” Weir noted, while Luckock said that “Permian cannot be the only solution to world oil supply while demand is growing by 1.7 million bpd. In the U.S. oil industry, it should be a marathon but people are running it at a sprint pace. They are doing an amazing job but growth is tiring in the Permian.”
By Tsvetana Paraskova for Oilprice.com