The essential point is that people are still fearing a break to the upside if supplies run short. However, two stories on Reuters yesterday showed the changing dynamics of the market.
The first story reflects the pressures on shale oil costs. With the production becoming increasingly viable the service providers too are looking for a share of these gains in terms of increased service costs / charges.
Secondly, the OPEC cut, and the hike in OSPs has opened the arbitrage for North American Crudes like Mars to find a way to the East. Therefore, there is not that much pressure from the East on OPEC as well. Whether this loss of customer base would pinch OPEC remains to be seen.
Last but not least, we are coming to the end of February now. And everybody is quite quiet on the extent of compliance this month. This should also give some direction. What should ideally happen for OPEC is that other countries should stand up for their commitments allowing Saudi to ease the excess cut that it has brought about.
Naphtha prices continued to ease out today. The March MOPJ crack is valued at $ 1.60 / bbl value. The Singapore crack for March is valued at around $ 0.55 /bbl
The gasoline crack held steady today as physical demand appeared to recover. The March crack is currently valued $ 12.25/bbl.
Gasoil prices stayed steady though the price differential between 500 ppm and 10 ppm sulfur gasoil continued to narrow (a sign of poorer demand for the better quality fuel). Jet, continues to remain an ugly duckling.
The March crack is valued at $12.6 / bbl with the regrade at -$0.55 /bbl.
Fuel Oil prices continued to be under pressure and buyers were aggressively looking to find homes for their cargos during the window. The March crack dipped to -$ 3.6/bbl and April around -$ 3.9 /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