This data, while bullish at first glance given the drop in crude oil inventories, makes one pause when one looks at the build in gasoline and distillate inventories. All the more so when one considers the fact that this was expected to be a ‘bumper’ driving season.
We would await data from the DOE to draw further conclusions on the same.
Naphtha cracks have strengthened considerably overnight, arguably on the back of low crude prices. The June Japan Naphtha- Dubai crack is valued at -$0.80 /bbl.
Gasoline cracks are also much stronger. The June 92 Ron-Dubai crack is valued at $11.7 /bbl. We would watch this crack closely and, at slightly higher levels, sell it to hedge refining margins.
Gasoil cracks are weaker at around $10.20 /bbl for June. The regrade, however has collapsed to $0.30 /bbl
The fuel oil market continued to gain in strength. The reasons could be various. For one, lower crude prices would have spurred demand on cheaper fuel oil prices. Secondly, high freight rates have effectively shut the East-West arbitrage. This would lower expectations of stocks arriving this month.
In May, 6.1 million tons of fuel oil made its way to the East. While this is lower than the expectation of 6.5 million tons, it is still higher than last year’s average of 5.9 – 6.0 million tons.
The June 180 cst crack is valued at -$ 2.8 / bbl. The visco spread is at $ 1.20 / 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.