Oil Price Digest 4

Crude Oil

Prices fell sharply on Wednesday on the back of strongly bearish EIA inventory report for week ending 2 June 2017. Brent fell by 4% or $2.06 /bbl to close at $48.06 /bbl while WTI fell even more by 5% or $2.47 /bbl to close at $45.72 /bbl.

Crude stocks built by 3.3 million barrels, Gasoline Stocks built by 3.3 million barrels and Distillate stocks also built by 4.4 million barrel.

All stocks are at their highest levels for this time of the year.

The crude build is explained in part by a drawdown from SPR stocks (1.6 Million barrels), a reduction in Exports (750 kbpd) and an increase in imports (356 kbpd)

Given that runs dropped to 94.1%, a 5% drop in Gasoline demand week on week and a 4% drop year on year is really bearish for crude oil.

The ongoing rift between Qatar and some of the Gulf nations is causing chaos in the shipping market with ship owners expected to impose a premium on cargoes originating from the country. This will likely push up naphtha premiums of which freight is a big factor. Qatar exports about 600,000 tonnes to 700,000 tonnes of naphtha a month.

However, relief has been granted by ADNOC so that lifting of crudes and products is not likely to be as troublesome as previously feared.

For now, the June Japan Naphtha- Dubai crack is weaker at -$1.40 /bbl.

Gasoline

Gasoline cracks were supported with some physical demand seen in the market from Malaysia and Philippines.

June crack is valued at $11.50 /bbl, unchanged from yesterday.

Distillates

Gasoil markets remained stable with continuing demand for physical cargos from India.

The June crack remains unchanged at $ 9.80 /bbl while the regrade continues to be in negative territory. June is now valued at -$0.20 /bbl.

Fuel Oil

Fuel Oil has strengthened on the back of supportive fundamental factors including falling supplies from key producers such as Russia and Venezuela as well as firm demand for power generation and bunker fuels. Fuel oil cracks continue to show strength in Asian markets while European low-sulphur fuel oil cracks are almost at the highest seen so far this year

The June 180 cst crack is higher at -$ 1.05 / bbl/ The visco spread is unchanged at $ 1.35 / bbl.

While these cracks appear strong, we need to remind ourselves that there are still a lot of stocks floating in the Singapore area.

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.