20 Apr 2017

Crude Oil

As mentioned by us yesterday, a build in gasoline severely crimped the bullish sentiment. Brent settled $1.96 lower at $ 52.93 / bbl. WTI corrected by the same magnitude; $ 1.97 to settle at $ 50.44 /bbl respectively.
DOE DataThe US department of Energy reported that Crude stocks in the US drew by 1 million barrels.  This was significantly lower than market expectations of 1.9 million barrels. Diesel drew by 2.0 million barrels against market expectations of 1.8 million barrels.  The surprise gasoline build reported by the API was confirmed by the DOE who reported a build of 1.5 milllion barrels.


We had remarked yesterday, that should the DOE data corroborate the build in gasoline, it would be disastrous for the bullish case.  The graph below shows why there is little merit in the bullish case even if the OPEC continues with the product cuts as is being discussed.

If we look at the chart above, we can see that the recent continuous drop in stocks is typical for this time of the year and hence should not be a cause for much concern.

If also look at crude imports for the last three months, they have averaged 7258 kbpd.  The imports for the previous four years have averaged 7294 kbpd.  Therefore, three months into the production cut, we are not seeing any difference with respect to the availability of supplies to the US.  Further, going forward, the domestic crude supplies is going to increase further thereby reducing pressure on the US for import of fuels.

Naphtha

The backwardation between H1 Jun – H1 July improved to $ 6.25 per ton. However, the paper market weakend with the Japan Naphtha Dubai May crack at  – $ 0.30 /bbl.  Singapore Naphtha – Dubai crack is at -$1.85 for the May

Gasoline 

Gasoline cracks stayed steady notwithstanding the build in the US. The May crack is valued at  $ 12.2 /bbl today. The May-June spread is valued at 37 cents / bbl.

Middle Distillates

Gasoil cracks improved wit the value of the May crack being reported at $12.00/bbl.  The regrade is steady -$ 0.10 /bbl for May.

180 CST Fuel Oil

Strong bids in the Platts Window yesterday lifted fuel oil cracks. The 180 cst Fuel Oil – Dubai crack for May is valued at -$ 3.35

About this blog

This blog post attempts to give a top level summary of the Singapore market goings on to a person who seeks to obtain a directional sense of the market on a daily basis.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

 

Leave a Comment