The new trading operations, which cover crude and oil products, will be centered around Asia, but it will also cover arbitrage opportunities from Asia to Europe and the U.S. West Coast. However, the transpacific arbitrage flow for most products has been plugged for the past two years due to a relatively
weak West Coast market.
Macquarie has no plans to trade physical oil in the U.S. and European regional markets for now, industry sources told OPIS.
In the past year, major banks, including JP Morgan Chase, and major international oil companies have been actively expanding their physical oil trading activities across the globe.
Despite physical trading being a high-risk and capital intensive
investment, some companies do see it as a high-growth area that could contribute substantially to their overall profitability.
“We see a particular opportunity in physical oil trading from an Asian viewpoint, as the region consolidates its leading position based on the growth of substantial new refining capacity, feeding the region’s high-growth economies, and taking a greater share of markets as far afield as Europe and
the west coast of the Americas” said David Heard, Head of Oil & Gas Asia at Macquarie in Sydney.
The six-person team is led by Steven Taylor, who is the division director
and head of physical oil in Asia. He joined from Masefield AG, an independent Swiss oil trading firm. Prior to Masefield, Taylor spent 20 years with Shell Group companies in a variety of Asian and global roles within the refining, supply and trading
functions.
The physical trading operations will complement the company’s global paper oil trading. In the U.S., Macquarie is focused mainly on oil derivatives and paper
trading.
This expansion into physical oil follows the progress of the bank’s Energy Markets Division’s physical natural gas and electricity trading businesses in North America and Europe, as well as its physical coal trading operations based on a similar seaborne cargo opportunity. The physical oil business expects to commence trading progressively in the coming months as regulatory and operational requirements are completed for key
jurisdictions in Asia.