Crude oil prices ended up remarkably well supported on the prospects of an extension of the period of reduced supply. Brent settled 6 cents higher at $ 52.99 / bbl. The WTI contract, which expires today ended 17 cents lower to settle at $ 50.27 /bbl respectively.
There is a severe tug of war going on between bulls and bears at this stage about what the OPEC is going to do and the impact thereof.
We are inclined to stick to our estimate at this stage that the cut, even if extended, is not going to make much difference to business as usual. The graph below shows the reason why. As of date, Crude Oil stocks are 161 million barrels above the average for 2011-15. There is nothing to suggest that this target (of the OPEC) would be reached by the end of the years.
The physical markets seemed to have been affected by the US data inventories. However, the paper market paid more attention to the Gasoline and Naphtha inventories in Singapore which drew by close to a million barrels. As a result, the Japan Naphtha Dubai May eased just marginally to – $ 0.35 /bbl. Singapore Naphtha – Dubai crack is at -$1.95 for May
Gasoline cracks reacted even more strongly to the draw in inventories. The May crack is valued at $ 12.45 /bbl today. The May-June spread is valued at 44 cents / bbl. While this spread is far higher than we had recommended a sale, we would still like to hold it till the end of this month on the premise that it is not likely to blow out much wider over this week. If at all, it would come in. If the spread does reach 50 cents, we would exit.
Singapore Middle Distillate stocks reported a huge draw of just over 2 million barrels.
Source : Bloomberg
While this draw is huge, the graph above shows that it is seasonal and expected. Gasoil cracks did not take much note of this data as the May crack eased to $11.70/bbl. The regrade continued to hold steady -$ 0.10 /bbl for May.
180 CST Fuel Oil
A huge build of 1.5 million barrels, helped ease fuel oil cracks. Exports from Singapore fell by 69% to a five week low of 393 KT.
Source : Bloomberg
Nevertheless, there was strong buying interest in the Platts Window yesterday which buyed the value of the fuel oil crack. 2,89 million tons have been traded in the window in this month so far. The 180 cst Fuel Oil – Dubai crack for May is valued at -$ 3.70
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