What is the asset class and geography you are focused on?
Our asset is basically energy markets, and currently we do five products: base oils, bitumen, fuel oil, gasoil, naphtha. Currently we have four offices: Geneva, Dubai, Mumbai and Singapore. So different products are traded in different geographies.
What is the outlook for the month ahead?
We feel that markets are pretty much range-bound for the coming month, and we see Brent moving between US$100 and $110 [a barrel]. All of our products are basically associated with Brent. So far we are not seeing anything [from the impact of the Iranian election] and we are yet to see any effects from how the negotiations and the discussions go with the West.
What are the main risks (either upside or downside) to the outlook?
Currently we are looking at a lot of factors. One is the way financial markets are going to behave next quarter. Another thing is the geopolitical situation. And we are also looking at the volatility for crude.
What is the best investment now?
Everything is wobbling right now, everything from stocks to bonds. Maybe gold will also find bottom. Our products are basically fast-moving products, so we don't look to hold anything. We buy and we sell. We do hedging for around 80 to 90 per cent of our products. We don't speculate on if a price is going to go up or down. What we do is trade on the premium and discount for products and that is reflected in the supply and demand situation.
What was the best investment you were involved in?
From a company perspective, we invested in the Fujairah terminal storage project and that has turned out to the best investment for Gulf Petrochem. We have seen a lot of demand for storage come up in Fujairah, and Fujairah is developing.
What was the worst?
I don't see anything that has gone against us in the last few years. Mostly everything has worked fine for us. Nothing much, but I think the negative structure on fuel oil last year was something that was not very favourable to us. The market was in full backwardation when we were trading. The future curve is negative and that means the future demand is negative. So that means even if you are in a 100 per cent hedge, you keep losing money on your product. So there is no incentive to store your product.
[ ayee@thenational.ae ]
