Crude Oil
The bulls reigned supreme as crude rebounded smartly on the back of bullish DOE weekly inventory data which saw drawdown in Crude, Gasoline and Distillates. Brent increased by $ 1.49/bbl to settle at $50.22/bbl while WTI increased by $1.45 /bbl to settle at $ 47.33/bbl.
With Brent closing above the psychological $50 mark, we can look for some more upside in prices. However, the OPEC Meeting on 25th May 2017 will be a key factor that will provide direction to the market.
On the flip side, there was a small report mentioning that Libya’s production had increased past 800 kbpd for the first time in a long time.
DOE Data
The EIA Reported yesterday that for the week ending 5th May 2017, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.2 million barrels, total motor gasoline inventories decreased by 0.2 million and distillate fuel inventories decreased by 1.6 million.
Crude stocks are slowly coming down to at least near the previous year’s level with draws of this size. This creates a scenario of hope for rebalance. This is notable particularly in the wake of refinery run rates going down to 91.5%.
Imports have dropped to 7.6 mbpd. This could arguably be construed as shortage of availability of material. However, we would like to point out that the time spreads in crude prices could have made storage of crude once again feasible.
Naphtha
The fundamentals for Naphtha continue to remain weak with some physical cargoes for full range heard to have been traded at weaker premiums vis a vis deals done last month.
The Japan Naphtha – Dubai crack for May fell to – $ 0.65 /bbl. The June crack is even weaker at -$ 0.90 / bbl The Singapore Naphtha – Dubai crack for May is valued at -$ 1.90 /bbl.
Gasoline
The gasoline cracks, influenced by the draw in the US have recovered strongly on the back of buying interest in the market.
The Singapore crack for May is valued at $ 11.3 /bbl. June is at $ 10.6 / bbl
Traders are reporting of some tankers having been booked to ship gasoline and blending components to the U.S. East Coast, but the arbitrage window is unlikely to sustain as the local refiners are cranking up output following seasonal maintenance.
Distillates
The gasoil market strengthened on the back of unexpected spot demand from India with Indian Oil Corp (IOC) is seeking up to 80,000 tonnes of euro IV gasoil for import in May. IOC is usually well-balanced in its gasoil demand and supply but there is speculation that this balance may have been disturbed due to a recent shift towards Euro IV fuel standards in India. In addition, spot demand from the Middle East is also expected to boost gasoil differentials.
The May Gasoil crack is valued at $ 10.65 / bbl while the June Crack is at $ 10.09 /bbl. The regrade, however, has weakened to -$ 0.54 /bbl and +$ 0.27 /bbl for May and June respectively.
Fuel Oil
The fuel oil weakened giving up the gains in recent days on market talk that supplies are likely to improve over the coming weeks. This view was supported by the likes of JBC Energy which reported in its daily note that it expected the global seasonal tightening trend to bottom out in the coming weeks.
The May 180cst-Dubai crack is unchanged at -$ 2.35 / bbl. June is valued at -$ 3.15 /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.