Below is a representation of the data released by the DOE
The fact that gasoline stocks built so much despite a drop of 2.9% in the refinery utilization rate needs to be looked at carefully. With weather being forecast as reasonably warm, there does not appear to be substantial consumption. We would consider this a red flag.
Another factor for the bullishness could be the weakness in the USD which is trading close to 1.07 vis a vis the EUR and above 1.2350 to the GBP. Followers of currencies will recall levels of sub 1.05 in EUR-USD and sub 1.20 in GBP-USD just a few days ago.
The physical Naphtha crack continued to show strength yesterday supported by persistent demand. However, in our opinion this may not be long lived as Singapore light distillate stocks rose by 1.09 million barrels. Further, naphtha stocks in the ARA region rose to 212 KT from 197 KT
The Naphtha crack for February is now valued at $1.90 / bbl and March at $ 1.10 / bbl.
We would reiterate our recommendation to refiners to hedge March Naphtha in particular
Trafigura was still seen buying gasoline for delivery in the first decade of February. The Cracker at the Ruwais refinery in Abu Dhabi is expected to take 2-3 months to return to normal operations.
The Gasoline crack for February has receded marginally to just about $ 12.85 /bbl today. The jury is still out on the direction of this crack.
However, on the balance, precisely because the jury is still out, we would recommend that refiners hedge a small piece for February at these levels.
The cash markets saw the UAE import around 40 KT of Jet and 25 KT gasoil last week. This is an unusual event as the UAE is normally an exporter of both fuels.
The gasoil crack eased out further with February valued $11.25 /bbl. The Regrade was valued between $ 0.60 /bbl and $0.65 / bbl
Fuel Oil stocks rose very marginally. However, that seemed to be enough to ease fears of short supply in the minds of traders. Considerable supplier selling reduced time spreads quite aggressively making Fuel Oil the greatest loser yesterday.
The February crack was valued at close to -$2.00 /bbl and the March crack slightly lower at -$ 2.40 /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