Oil prices rose about 3 percent on Wednesday and hit fresh 3-1/2 year highs after a bigger-than-expected drawdown in U.S. oil inventories extended gains from the United States’ decision to quit a nuclear deal with Iran. Brent futures rose $2.36 to settle at $ 77.21 /bbl while U.S. crude futures climbed $ 2.08 to settle at $ 71.18 /bbl.
Both crude futures notched their highest gains in over a month. However, it may be noted that the jump in crude futures after the DOE data was released (approximately 25 cents) was not as much as may have been expected by the extent of draw.
The US DOE reported a draw 2.2 million barrels in crude stocks, significantly higher than market expectations of around 700 KB. With products too drawing significantly, this has been one of the most bullish set of numbers seen in recent times.
The draw in crude has largely been caused by a massive drop in imports which we regard as an aberration which will be corrected next week. Having said that, if the draw were correct, the material balance table below shows a much higher draw for crude stocks which also should show up next week.
The draw in gasoline has been caused by a healthy growth in demand of 685 kb/d. However, gasoline futures settled yesterday at $ 2.17 / gallon, prices not seen since hurricane Harvey. The ability of demand to sustain at these levels has to be seen.
While the price elasticity of demand would apply to distillates as well with distillate futures which settled at $ 2.23 /gallon, the level of distillate stocks in the US is now almost at the lowest level seen for the this time of the year.
For detailed charts on crude and product stocks, please visit our US Department of Energy Data page
Asia’s naphtha crack hit a four month high of $ 104.93 /MT on Tuesday as more buyers emerged for product.
The crack for balance May is slightly lower at $ 0.10 / bbl. The June crack is still at – $ 0.15 / bbl
Asia’s gasoline crack was at a five-session high of $ 6.79 /bbl but this was down nearly 34 percent versus a year ago as current high supplies dragged.
In Japan, gasoline stocks edged up 160,000 barrels to reach a two-week high of 10.81 million barrels in the week to April 28. Stocks in Fujairah, however, fell by 399 kb to 6.9 million barrels.
The balance May crack is now at $ 10.00 / bbl. The June crack is at $ 19.60 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for jet fuel dropped to their lowest in one and a half months as the prompt month spread continued to narrow its backwardated structure. Meanwhile, steady demand pushed the cash differentials for gasoil with 10 ppm sulphur content to 45 cents a barrel to Singapore quotes, up from 39 cents a barrel on Tuesday.
Middle distillate inventories in Fujairah rose by 259 kb to 2.29 million barrels.
The balance May crack is slightly lower $ 15.15 / bbl with the 10 ppm crack quoting at $ 15.85/bbl. The regrade is valued at $ 0.25 /bbl
The June crack has also dropped to $ 15.15 / bbl with the 10 ppm crack quoting at $ 15.90 /bbl. The regrade is valued at $ 0.50 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Bullish sentiment lifted the front-month fuel oil crack on Wednesday despite sharp gains in crude oil prices.
Fujairah stocks fell after four months of gains by 542 kb to 9.02 million barrels. This is expected as summer demand for fuel oil for power generation will increase consumption.
The May 180 cst crack has improved to -$ 5.75 / bbl. The visco spread is steady at $ 1.60/bbl.
The June 180 cst crack is at -$ 5.50 / bbl. The visco spread is at $ 1.65/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The cal 2019 cracks have receded a bit but are still extremely strong as can be expected.
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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.