The starts did not give precise figures for the losses, but they said they were ample for Gunvor and BP to fire at least one trader each.
The companies declined to note, and none of them publish details of their individual trading lyrics.
It highlights the challenges of trading in WTI futures, the benchmark for U.S. crude, when U.S. main and storage infrastructure struggles to keep pace with surging shale yield, that has lifted the United States above Saudi Arabia to evolve into the world’s second biggest crude producer behind Russia.
“As the exporter of U.S. offensive, traders are naturally long WTI and hedge their bets by shorting Brent. When the spreads dilate so wildly, you lose money,” said a top executive with one of the four truck firms.
The discount of WTI to Brent hit $11.57 a barrel on June 6, the widest in multitudinous than three years, as U.S. output surged to record highs and bettered pipeline capacity as traders rushed to export. The discount had been far $5 just a month before.
Betting on the price spread, a everyday trade in oil markets, is based on predictions of price differences between European and U.S. bazaar fundamentals.
The jump in U.S. output, now almost 11 million barrels per day (bpd) from less than 5 million bpd a decade ago, has upended the spread. Until 2010, U.S. crude mostly swopped at a premium to Brent. But the growing availability of U.S. crude has meant that it has approximately always been at a discount since then.
However, it is the big, sudden make hastes that tend to claim trade casualties, sometimes earning the moniker “widowmaker”.
Due to the Canadian outage, inventories aftermost week at the Cushing delivery point for U.S. crude futures fell to their crudest since December 2014, U.S. data showed.
Volatility in the spread has been decent one of several trading hazards that emerged in the first quarter of 2018.
Purchasers have also had to pay heavy premiums to exit U.S. storage leases as the oil price system flipped to “backwardation”, when near-term prices are higher than those for up to the minuter delivery, making it unprofitable to store crude.
Climbing U.S. output has put harms on the pipeline network, particularly in the Permian basin in Texas which has been the biggest contributor to the putting out surge.
A bottleneck that hit U.S. crude for delivery in Midland, Texas WTC-WTM contracted BP off guard and led to losses when the discount to WTI shifted sharply during April to June, according to four market starts and one source close to BP.
In late April, the discount was close to $6 a barrel in advance of widening to as much as $13 on May 4. This was followed by a sharp bounce back to around $5 in the second half of May followed by a similar oscillate move in June.
Three BP traders took the heat for losses tied up to the Midland rollercoaster. The source close to BP said one was sacked and two others were reshuffled internally.