Yesterday’s drop was attributed to a report that US shale oil production was expected to rise by to levels not seen for many months. Furthermore the rate of increase is also at multi month highs suggesting that production may be surging far faster than estimated.
How does one interprest this terrible confusing data? And indeed confusing it is for even the biggest players in the market. It appears that everybody is long, but everybody is bearish. The ratio of spec long positions to short positions is bewilderingly high at 9:1. Given that when news of the cut first came this ratio was at 2:1, the increase has been nothing short of dramatic.
The bulls (which is most of the world) make a compelling case for why this should rise i.e. economic growth leading to demand growth and growing costs of shale oil production because of ‘demand for shale oil drilling facilities and skills’
What is true however, is that all parties are entrenched too deep into their positions to make a simple exit without disturbing the markets too much a very unlikely proposition.
Naphtha remained firm albeit marginally weaker. The March MOPJ crack is valued at around $ 3.0 / bbl. The Singapore crack for March is valued at $ 1.5 /bbl.
Gasoline too continues to be strong on paper. However, the crack has dropped in value. The March crack is valued at $ 13.7/bbl.
The gasoil dropped as mysteriously as it had risen. The March crack is valued at $12.10 / bbl with the regrade at -$0.30 /bbl. Basically Jet did not fall as heavily as gasoil did.
The Fuel Oil market stayed firm today although some strong selling was seen in the window.
The March crack dropped marginally to -$ 3.35/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