The recent bull run in crude oil took a pause on Tuesday on the back of bearish API inventory data which contrary to expectations, saw a build in crude and distillates. Brent settled down 17 cents at $51.65 a barrel and WTI ended 19 cents down at $48.66 a barrel.
The International Energy Agency (IEA) said on Tuesday that commercial oil inventories in industrialized countries rose by 24.1 million barrels in the first quarter of the year, a time during which the OPEC-led production cut was already in place. Despite this, analysts said that an extension of the supply cut was important.
Crude prices are once again sitting on the 200 DMA awaiting DOE data. A confirmation of builds should negate the impact of the extension of cuts. The price action of the last couple of days seems to indicate that market is sceptical of the benefits of this action.
API Inventory Data
US crude oil inventories rose 882,000 barrels at the end of last week, against an expectation of a decline of 2.3 million barrels. Similarly, distillates stocks increased by 1.79 million barrels against analysts expectations of a decline of 1.050 million barrels. Only gasoline stocks fell 1.78 million barrels against an expectation of a drawdown of 731,000 barrels.
Naphtha continued to be weak with poor demand and abundant availability. Unexpected offering of a second cargo by India’s ONGC is only adding to the supply glut. It is unclear why ONGC is offering cargoes in the market instead of using the material as feedstock for its cracker operated by ONGC Petro.
The June Japan Naphtha- Dubai crack is down at -$1.20 /bbl.
The bullish API Inventory data notwithstanding, the gasoline market continues to be under pressure as there is plenty of availability to meet demand.
The Singapore crack for June is down at $ 10.30 /bbl
The distillates continue to be under pressure on account of adequate supplies in the markets. With the arbitrage opportunity to move Jet from East to West shut, the availability in the East will only increase. Weakness in the market is reflected by Dhabi National Oil Company’s (ADNOC) inability to get an acceptable bid for it term offering of Jet and Gasoil for loading between July 2017 and June 2018
Consequently, the June Gasoil crack is unchanged at $ 9.65 / bbl with the regrade continuing to strengthen at at $ 0.50 /bbl
Weakness in the Fuel Oil markets is evident from the fact that a total of 1.22 million tonnes of fuel oil has traded in the Platts window since the start of May, against 3.821 million tonnes in April.
The June 180cst-Dubai crack is down at -$ 3.10 / bbl and the Visco spread is at $1.10/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.