Crude prices stayed in the negative zone for most of the US trading day. However, towards the end of the day, there was some rally due to reports that OPEC may consider not only extending the supply cut, but also increase it.
Crude prices are at a critical impasse currently. Massive positions taken by funds on a hypothesis that there would be a shortage of stocks does not seem to be playing out. Therefore, there is tremendous pressure to find reasons to defend the hypothesis failing which prices must be headed for a crash.
It is too early yet to give credence to the reports of an increased cut or an extended cut. However, if any of this happens, it would be a clear case of cartelising to fix prices. Which is not necessarily a good thing to happen in any market.
Naphtha prices eased more yesterday. The March MOPJ crack is valued at $ 2.25 / bbl value. The Singapore crack for March is valued at around $ 1.30 /bbl
Gasoline stocks in Singapore dropped by 1.5 million barrels. Nevertheless, Gasoline stocks in US seem to have had a higher impact on the cracks as the March crack collapsed to $ 12.6/bbl.
Gasoil prices continued their downward slide today. This is notwithstanding a drop of 700 KB in stocks. Traders believe that stock levels are high enough. Further, with arbitrage from India to the West fairly shut, more stock is expected from India into Singapore.
The March crack is valued at $12.15 / bbl with the regrade at -$0.25 /bbl.
Fuel Oil stocks too dropped by 1.7 Million barrels. While this has been reported as unexpected, the market appeared to have factored this drop as cracks eased. March is valued -$ 3.0/bbl and April around -$ 3.5 /bbl.
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Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity