Crude oil
The crude oil market was in a state of backwardation throughout the year, with spot
supply constrained by such factors as the impact of US sanctions on Iranian and
Venezuelan
crude exports. At the same time geopolitical concerns and the ongoing trade conflict
between
the US and China drove volatility in both prices and flows.
This was a favorable trading environment for the crude team, which had an excellent
year expanding
both volumes and profits. We extended our lead as the largest exporter of US crude,
with flows growing
further from August onwards, thanks to shipments through the Plains All American
Cactus II pipeline linking
the shale fields of the Permian Basin to a storage and loading terminal on the Gulf
Coast. Access to this
infrastructure gives us a unique and highly efficient means of channeling premium
quality US crude oil to
global markets. It means we can take full advantage of profitable arbitrage
opportunities into Europe and
Asia and build deeper client relationships with Asian refiners. At the same time, we
maintained our
long-term supply relationship in the Urals market and built Middle East crude
volumes during the year.
Overall, physical margins improved markedly over 2019.
With these favorable trends set to continue, and a very strong crude oil trading
team, we are optimistic about
performance in 2020. We expect US volume to continue to grow, demand for US light
sweet crude to gain extra
momentum from IMO 2020, and margins to continue to build.