Oil Trading / Products & Distillates

Oil has been a staple of the industrial advancement of the world for over a century, and the demand for distillates and products continues to grow despite a push towards renewables and biofuel in many countries.  Imperium Commodity Search maintain relationships across the Products and Distillates space, working with both trading houses and brokerages covering the international oil markets across the barrel.  

Our consultants have worked with firms globally on niche products and distillates across a range of markets.  We pride ourselves on staying in touch with the markets and working with our stakeholders as a true partner rather than a supplier. 

What are Distillates?

Distillates or Products are the oil products that come from the fractional distillation process of crude oil and are used as energy and chemicals in a variety of machinery and fuel applications.  Crude oil is distilled and refined into different products with different uses through a fractioning column that separates grades of oil based on their boiling point.  From there, all of the fractions are further refined before being shipped for use to remove impurities, add additives and any chemicals needed for the specific application.  

Distillates are split into three key areas: Heavy Distillates, Middle Distillates and Light Distillates / Ends.  The terms to describe these are based upon the boiling point of the products, with heavy distillates having the highest boiling point and light distillates having the lowest.  The lowest boiling point products are extracted at the top of the fractional distillation column and the heaviest at the bottom. 

Heavy Distillates / Oils are often ‘cracked’ into more useful products through a process of extreme heat, pressure and the use of a catalyst to break down the long hydrocarbon chains.  Some heavy oils are used as products for certain applications, such as waxes, lubricants or asphalt/bitumen.  Heavy fuel oil has traditionally been used in bunkers / shipping fuel as it is relatively cheap to produce.  Steps are being taken to remove this product from shipping fuel due to the extremely high level of pollutants that it produces when burnt.  Other grades of fuel oil exist whereby they have been mixed to some extent with distillates.  These are called Intermediate Fuel Oil’s or with a much higher concentration of distillates, Low Sulphur Marine Fuel.  Bitumen/Asphalt is used in road building and waterproofing roofs and is a heavy sticky residual substance of petroleum production.  Lubricants are a heavy distillate and are used in the motor industry, as well as marine and metal applications. 

Middle Distillates / Oils are products with a medium level boiling point and include many fuels used to power every day vehicles, as well as aeroplanes / airplanes and industrial engines.  Kerosene (paraffin/lamp oil) is used in aviation applications as well as household fuel for heating and cooking in many regions.  In the UK/Ireland it is common for Kerosene to be used for heating systems in remote areas.  In many parts of Asia and Africa, Kerosene is a common cooking fuel along with LPG.  Jet fuel or ATF (Air Turbine Fuel) is, as the name suggests, fuel used to power jet engines.  Jet-A and Jet-A1 are produced to specific international specifications in line with regulations to ensure safety of the operation of aircraft across territories.  Jet fuel type A / A1 is a kerosene based product whilst Jet-B is naphtha based.  Diesel from an oil perspective is a middle distillate used in the powering of cars, trucks, rolling stock and heavy machinery.  Diesel is produced in slightly different grades for different engine types and applications. 

Light Distillates / Oils are distillates with the lowest boiling point and are sometimes referred to as ‘top of the barrel’.  These are mostly used as fuels and include Gasoline or ‘Petrol’ which is used as a fuel in spark-ignited petrol engines.  Gasoline often has ethanol or lead added to it to increase its combustibility and its performance in engines for vehicles.  LPG is a flammable gas produced through the distillation process; also referred to as propane or butane.  LPG is used as a general fuel globally and is shipped to retail customers in metal canisters for use as patio fuel for BBQs, cooking gas and heating fuel.  In some countries, LPG is used as an auto fuel in cars and referred to as autogas.  This usually requires special licenses and conversion kits on standard petrol cars.   India is one of the largest global consumers of LPG due to its poor gas infrastructure, many families rely on LPG bottles to provide heating and cooking gas.  The last of the key light ends or light distillate products is Naphtha.  Naphtha is used primarily as a diluent for crude oil to reduce its viscosity and make pipelines and shipping easier.  Naphtha is also used as a light fuel for lighters and as a solvent/cleaning solution for metals. 

How are Distillates / Products traded? 

Products are traded differently dependant on the distillate.  Distillates are shipped from refineries in tankers (both road and marine) to be delivered to producers, distributors and wholesalers of fuel products.  Bunkers and heavy oils are shipped directly to physical suppliers in ports to be sold into shipowners or stored in barges.  Other products are delivered directly to the retail side of the fuel provider, such as petrol or gas stations, diesel pumps and LPG bottling facilities. 

Back to Back and Physical Arbitrage traders buy and sell petroleum products and distillates and store these, selling them onto different markets, both domestic and export, with the ultimate aim of making a margin or profit on the trade.  Traders will either hold stock to sell at a profit, or deliver stock to customers in different regions, arranging the shipping/transportation to the end user.  

Derivative Traders trade the many futures and options contracts available across different products and distillates with the view to making a profit either for themselves (with speculators and proprietary traders) or for their client (with flow traders or hedge funds).  Derivative traders also work in house at physical oil traders to generate extra revenue or to hedge against price risk of the physical trades. 

Oil / Distillates Futures Brokers work with both corporate and institutional clients on risk management, hedging and futures execution.  Oil products are traded on numerous exchanges globally and brokers add liquidity to the markets by giving access to numerous market participants and often making markets for oil traders, speculators and funds.  

Where are oil products / distillates traded? 

Different countries rely on different distillates and products for their fuel sources and the key players in different markets depends largely on the regions reliance on specific fuels/products. 

The largest exporters of oil products/distillates (in order of production quantities) are: 

  • Saudi Arabia
  • Russia
  • Iraq
  • Canada
  • UAE (United Arab Emirates)
  • Iran
  • Kuwait
  • Nigeria
  • Angola
  • Kazakhstan 

Who are the key players? 

The largest oil refineries in the world (by barrels per day) are: 

  • Jamnagar Refinery (India) 1.24m
  • Paraguana Refinery Complex (Venezuela) 940k
  • SK Energy Ulsan Refinery (South Korea) 850k
  • Ruwais Refinery (UAE) 817k
  • Yeosu Refinery (South Korea) 730k
What is the Salary for an Oil Products / Distillates Trader? 

Oil traders can earn large base salaries, often in excess of 250,000USD plus a bonus or revenue split based on profit.  Traders within refineries or producers which sell product directly are often on a higher base with less bonus element.  Back to Back traders are paid higher bonus shares with the key driver of making margin or PnL on their trading portfolio. 

Imperium Commodity Search – Specialist Headhunter to the Global Oil Trading markets

Imperium Commodity Search and her consultants have worked with oil traders, brokers and operators for years, covering front and middle office roles across trading houses, majors and brokerages globally.  We utilise a headhunt led and research backed approach to recruitment within the distillates & oil space, ensuring we are only matching exceptional candidates with exceptional clients and vice versa.  

If you are interested in finding out how we can assist you in finding your next opportunity in the oil products and distillates markets, or are growing your trading team and looking to identify/source top talent, then please call us now on +44 (0) 203 927 5090 or register online here and one of our Oil and Gas Consultants will contact you ASAP.

To view our current oil and energy trading, operations and support vacancies click here or contact one of our consultants to discuss current careers / jobs in oil trading to discuss your needs in more detail. 

To arrange a consultation with a consultant to discuss your hiring needs / growth plans and where we can assist click here or contact one of our consultants directly here for a confidential discussion

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