Light Distillates Trading

Crude oil is of little use in its raw state, it is the refined products which are most valued by the end consumer. In the distillation tower, crude oil is separated into light distillates, middle distillates, heavy distillates and residuum (read more on crude oil).

Redstone Commodity Search works globally with international traders, brokers and transport groups who are responsible for the global supply of light distillates. We have helped clients in both, developed and emerging markets. Recently worked mandates include:

  • LPG Trader, Italy
  • Naphtha Trader, Dubai
  • Head of Light Distillates Trading, Dubai
  • East Africa LPG Trader, Switzerland
  • Head of LPG, India
  • Light Distillates Operator, Switzerland
  • LPG Analyst, France

What are Light Distillates?

Light distillates is the term used to describe refined oil products which are produced following fractional distillation at the top of the distillation tower, above the middle distillates (kerosene, jet fuel, diesel) and heavier products (heavy fuel oil (FO), asphalt, bitumen, lubricating oils and waxes). Light distillates have the lowest boiling points, consist of short hydrocarbon chains, and are flammable substances which can be in either a gaseous or liquid state.

The main light distillate products are:

  • Liquefied petroleum gas (LPG) – one of the most vital alternatives to gasoline, powering millions of vehicles. Ideal fuel for heating and cooking due to its high energy content and ability to burn readily in air.
  • Gasoline (also known as petrol) – primarily used as fuel in internal combustion engines and the most commonly used transport fuel. It is used in cars, trucks, boats, motorbikes etc. It can also be used to power motorised equipment such as lawn mowers and chainsaws.
  • Naphtha – can be used in solvents, as fuel (portable camping stoves, lanterns, cigarette lighters), and as feedstock for petrochemical production

How are Light Distillates Traded?

Physical traders generally focus on one or more oil product from within the same group. For example, a trader might specialise in gasoline trading or gasoline, naphtha and LPG trading depending on the company. Some light distillates traders may also trade in lighter middle distillate products.

Light distillate products are transported in tankers or cylinders depending on quantity and product. Gasoline is not usually transported in large quantities for safety reasons – instead, crude oil is transported to the country of use and is then refined.

Light distillates are also traded in financial markets as derivatives contracts. Examples include:

  • LPG – Propane, Argus CIF ARA, Fixed Price Future (APC); Normal Butane, OPIS Conway In-Well, Fixed Price Future (IBC); Month Belvieu Iso-Butane (OPIS) Futures (81); Argus Propane Far East Index Futures (7E)
  • Gasoline – RBOB Gasoline Futures (RB), Gulf Coast CBOB Gasoline A2 (Platts) vs. RBOB Gasoline BALMO Futures (GBB); NY RBOB (Argus) Gasoline Futures (NYA); Los Angeles CARBOB Gasoline (OPIS) Futures (MH); Gasoline Singapore Mogas 92 Unleaded (Platts) Future (SMT)
  • Naphtha – C+F Japan Cargo Future (NJC); Naphtha FOB Med Cargoes (Platts) Future (NIT); Singapore Naphtha Future (NPT); European Naphtha Cargoes CIF NEW (Platts) Calendar Month Future (EJN)

Who are the customers?

  • Vehicle owners
  • Transport companies
  • Petrochemical producers
  • Users of motorised equipment (lawn mowers, chainsaws, compressors, electricity generators)
  • Hospitality sector (mobile catering vans)
  • Paper and food processing industries
  • People who live/work in remote locations not connected to the mains gas

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