Crude Oil
Crude oil closed marginally higher after trading near its lowest since late March on the back of bearish US Stock data that showed a lower than expected decline in U.S. inventories.
Brent rose by $ 0.33/bbl to settle at $50.79/bbl while WTI gained $0.16 /bbl settle at $ 47.82/bbl.
Post the bearish data, Brent prices dipped from around $ 50.80 to test lows at $50.20-$50.30 levels. After a couple of attempts, prices rose back up, presumably on short covering after failure to breach support. In the wake of the bearish data, $50.00 does look like a psychological support for now.
In other news, it is being heard that India plans to buy about 25% less Iranian crude oil than it bought last year due to a row between New Delhi and Tehran on development of a natural gas field. However, we were unable to confirm the same from our sources
DOE Data
The EIA reported yesterday that US Crude inventories fell by 930,000 barrels in the week to April 28, which was significantly lower than analysts’ expectations for a decrease of 2.3 million barrels. Gasoline inventories increased by 0.2 million barrels and distillate inventories fell by 0.6 million barrels. Only the distillate draws were at odds with expectation.
While the gasoline build was much lesser than expected, we need to bear in mind that refinery runs have dropped from 94.1% to 93.3%. Demand for gasoline too has dropped by 0.5% week on week. As a result, gasoline stocks are marginally higher than at the same level last year.
Further, Crude imports have dropped by 650 kbd. and Product imports have dropped by 350 kbd. The whole picture therefore looks pretty bleak.
Naphtha
As reported in yesterday’s digest, Naphtha continues to be weak as adequate supplies of gasoline is leading to disposal of naphtha which otherwise would have been used for blending. The cracks are being reported at similar levels to those of yesterday.
The Japan Naphtha – Dubai crack for May is unchanged at – $ 0.75 /bbl. The Singapore Naphtha – Dubai crack is also the same at -$ 1.9 /bbl.
Gasoline
The Gasoline market weakened quite a bit in the wake of bearish US Stock data. The Singapore crack for May is valued at $ 9.70 /bbl. which is a $0.80/bbl drop from yesterday.
While no physical trades were reported, Gasoline swaps were actively traded in the Platts window with Hin Leong and Gunvor being active buyers.
Middle Distillates
Distillate cracks also dropped dramatically, arguably on the news of Taiwan’s Formosa Petrochemical (Asia’s fifth largest in terms of refinery capacity and a key middle distillates exporter), restarting a crude unit and a residue fluid catalytic cracking (RFCC) unit among other secondary units last week. With this additional capacity coming back onstream, there will be further pressure on cracks which have already come off since yesterday.
Jet prices however improved a little.
The May crack is valued at $ 10.00 / bbl which is a $0.70/bbl drop from yesterday. The regrade has improved to – $ 0.50 / bbl.
180 CST Fuel Oil
The Physical Fuel Oil Market continued to strengthen with the Platts Window witnessing a fair amount of trading interest and several deals getting done. Traders are also seeing an increase in the Visco spread due to shortage in prompt supplies of blend stock. The Visco spread is the difference betweeen 180 cst Fuel Oil and 380 cst fuel oil prices. It is currently at $ 8.5 / ton which is 50 cents higher than last week.
However, the physical strength has not translated into improvements in the paper crack. May 180cst-Dubai crack is unchanged at -$ 2.90 / bbl.
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.