Crude Oil
Crude Oil broke through the strong technical support of the 200 day moving average as funds bailed out of long positions on bearish news.
Brent fell by $ 1.06/bbl to settle at $50.46/bbl while WTI lost $1.18 /bbl settle at $ 47.66/bbl.
The fall was attributed to news of rising output from the US, Canada and Libya which we had mentioned in yesterday’s Oil Price Digest and news of a drop in compliance of OPEC production cuts to 90% from a revised 92% the previous month.
However, the API data has some good cheer for the bulls. API reported draws of 4.1 million barrels in crude inventories, 1.9 million barrels in gasoline inventories and 0.4 million barrels in diesel inventories. If corroborated by the official DOE data, the news should be enough to pull prices firmly over the 200 DMA.
Having said this, we have to say we don’t expect a strong rally to occur again for a while. The market has faced too many ups and downs for this draw to be a convincing argument that rebalancing is well on its way.
Naphtha
Naphtha cracks continued to decline on the back of significant inventories in Singapore and the US as traders looked to sell off excess naphtha which otherwise would have been used to blend into Gasoline.
The Japan Naphtha – Dubai crack for May is at – $ 0.75 /bbl. The Singapore Naphtha – Dubai crack is at -$ 1.9 /bbl.
Gasoline
Gasoline cracks have rebounded buoyed by a significant draw in gasoline stocks in the US as reported by API yesterday combined with a considerable 7% decline in Gasoline inventories in ARA. However, the upside may be limited as, the draw notwithstanding, inventories in both the US and Singapore are still quite high.
The Singapore crack for May is valued at $ 10.50 /bbl. which is approximately the same levels as were available at this time last week.
Middle Distillates
A fall in distillate inventories also helped prop up the Gasoil and Jet cracks. However, the upside is looking limited due to continuing record exports from China and India and nonviable economics to move surplus cargoes from East to West.
In other news, S&P Global Platts has announced that it will launch new 0.1% sulphur marine gasoil and diesel oil prices at several bunkering ports in Asia from 1st June 2017. The rationale for introducing these low sulphur grades alongside the existing grades is to cater to the rising sales of these fuels sold in Singapore which will only increase in the wake of tightening global standards in the coming years.
The May crack is valued at $ 10.70 / bbl. The regrade has marginally improved to -$ 0.65 / bbl
180 CST Fuel Oil
Fuel Oil witnesses a sharp rise in premiums taking it to near 2017 high levels. Traders ascribed the high cost of arbitrage cargoes delivered to Singapore as the chief reason for this increase.
The May 180cst-Dubai crack is valued at -$ 2.90 / bbl today.
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.