Crude were extremely well supported during the trading day yesterday notwithstanding the fact that prices settled marginally lower. Brent lost 14 cents to close at $ 51.62 / bbl. WTI lost a lot more, i.e. 56 cents to settle at $ 48.22 /bbl. This is probably due to the fact that the WTI front month future expires today.
Markets briefly surged into positive territory on reports that OPEC increasingly favor extending cuts beyond June 2017. However, this would be subject to non OPEC producers following suit.
We have consistently been maintaining that price rises from here on have to be demand driven. With refining margins in Asia (the highest growth market) consistently declining since January 2017, we do not see any radical demand for products which will compel refineries to run at these low margins.
Having said that, the bull traders have managed to keep prices from dropping yesterday. We do not expect any significant movement in prices, especially downward, until the API data figures are published after close of trading today.
Demand for physical Naphtha eased out significantly as the market now expects supplies of the order of 1.4 million tons in April, up from a prior estimate of 1.1 million tons. Further, with winter coming to an end, LPG is also expected to be availabe for cracking. The MOPJ crack for April is valued at $ 0.9 /bbl. The Singapore crack for April is at -$ 0.95 /bbl.
Gasoline cracks strengthened significantly today. The immediate reason for the strengthening is not known. The April crack is valued at $ 10.8 /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