Crude Oil
Crude Oil prices continued their downward plunge before Brent found support at $ 48.95 / bbl.  Weekend covering then commenced and Brent eventually closed just under $ 50.00 / bbl at $ 49.95 /bbl, a drop of 68 cents.  WTI too lost 70 cents to close at $ 47.66 /bbl
As another commentator mentioned, crude oil seems to be in the throes of a bear grip given that even bullish stock data from the DOE failed to enthuse investors.

As a measure to talk up the market, some OPEC participants mentioned the possibility of a further cut in production. That unfortunately seems to be unlikely as the topic would have been discussed and mentioned during the press conference post 25th May.

On the bearish side, Baker Hughes reported an increase of 11 rigs drilling oil last week bringing the total count to 733. This would tend to show an increase in production going ahead.  Libya is 200 kbd higher than when the cuts started first in terms of production.  Nigeria too is significantly higher. The US is 500 kbd higher and rising. Russia is straining at the leash to increase production. Chinese imports are reportedly on the decline with the teapots reducing runs.

Technical Analysis
In the daily chart, Brent seems to have broken all the major support points in its drive downwards.  The momentum of the downward move suggests that it has some way to go before reversing trend.

The week saw the MACD in the dailies cross over and move into negative territory. However, there does seem to be a spot of bullish divergence in the MACDs which should manifest in the event of a further dip in the early part of the week.

The weekly chart shows Brent test the bottom of a slowly rising channel which should also give some succour to bulls.

Supports below lie at $ 48.95, then in the $46.40-60 area and then at around $ 43.50-60 area.  Resistances are at $ 50.95-$51.15 area, then at $ 51.40-50 and then at $ 51.80-52.00

Naphtha

Naphtha cracks have started the week on a subdued note. The June Japan Naphtha- Dubai crack is valued at -$1.10 /bbl.

Gasoline

Gasoline also cracks have strengthed in Asia. It is interesting to note though in the global context that while Asian stocks are near the 5 year average, in both US as well as the ARA region they are at their highest levels in the last several years for this time of the year.

 

 

 

 

 

The June crack is valued at $11.70 /bbl in June. The crack is expected to remain strong due to refinery maintenances in Indonesia and Vietnam. Also, any delay in the turnaround of India’s HMEL refinery could also result in fresh imports being sought out of India.

We would maintain our stand of watchfulness going ahead and look for opportunities to hedge.

Distillates

Refinery maintenances continue to support distillate cracks notwithstanding high stocks in Singapore. India’s CPCL refinery is shutting down its 210 kbpd DHDS unit for maintenance and upgradation for 6-8 weeks along with its CDU and VDU. Indian Oil has shutdown its Koyali refinery for maintenance for more than a month for routing maintenance last week.  This is in addition to the refinery shut downs at Indonesia and Vietnam.

The regrade, is at $0.35 /bbl. While the regrade is at the same level it was yesterday, August and September levels have fallen by around 10 cents each.

The regrade, however, has collapsed by more than 25 cents to about $ 0.05 /bbl in the front.

The June crack is valued at $ 10.20.

Fuel Oil

Fuel Oil cracks strengthened further as bulls were emboldened by the lack of offers in the Platts window on Friday. To add grist to the mill, Fuel Oil stocks in the ARA region have dipped by 217 KT to below their 5 years average for this time of the year.  With the arbitrage to the east appearing shut, it is not clear where additional supplies will emerge from.

The June 180 cst crack has jumped in value at -$ 1.5 / bbl, a huge increase. The visco spread has increased to $ 1.40 / 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.

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

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