Crude Oil
Crude prices continued to climb smartly on the back of the Saudi-Russia joint statement for extending production cuts upto March 2018. Brent settled up 98 cents at $51.82 a barrel, having touched $52.63. WTI ended $1.01 firmer at $48.85 a barrel.
Whilst the market is reacting favorably to the announcement, it remains to be seen whether all countries participating in the deal will agree with the Saudi-Russian stance when they meet to decide policy on May 25 later this month. Meanwhile some analysts are already predicting a price of $57 /bbl on Brent by 3Q2017.
In other news, the Forcados pipeline in Nigeria came back online last week and the Qua Iboe pipeline is being tested currently. Together, these pipelines will bring back output to its pre-disruption level of 1.8 mb/d which will be a significant addition to the daily oil production.
Naphtha
Naphtha continues to be under pressure in the wake of high inventories and lukewarm demand. Some physical long term contracts in the Middle East were heard to have been concluded at weak numbers. Also the rising crude prices are pressurizing the cracks further as naphtha prices aren’t able to keep up.
The June Japan Naphtha- Dubai crack is lower at -$1.00 /bbl. The Singapore Naphtha crack is at -$ 2.75 /bbl
Gasoline
Similar to naphtha, Gasoline cracks weakened on account of poor demand and adequate availability. This was accentuated by the fact that no deals were struck in the Platts Trading Window (first time this has happened since May 3 earlier this month)
The Singapore crack for June is down at $ 10.45 /bbl
Distillates
Although the gasoil market continues to remain strong on the back of demand from Vietnam, India and Bangladesh, the cracks weakened on expectations that supplies will soon increase with many refineries returning from maintenance.
Consequently, the June Gasoil crack is down at $ 9.65 / bbl. but the regrade is slightly up at $ 0.40 /bbl
Fuel Oil
The sharp rise in crude prices over the recent days put pressure on Fuel Oil cracks as well which just couldn’t keep up with the upmove. Although there appears to be demand for the 380cst grade of fuel oil, the cracks are looking weaker.
The June 180cst-Dubai crack is down at -$ 3.15 / bbl and the Visco spread is lower at $1.14/bbl.
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.