The API data for this week is bullish from all points of view
First of all, crude inventories have dropped by close to a million barrels (884 KB) against expectations of a build of 3.5 Million. Gasoline stocks fell by a similar amount (893 KB) which was in line with expectations. The biggest surprise was distillate stocks dropping by 4.2 Million barrels against an expectation of a drop of just under half a million barrels.
Unless the DOE data is terribly different, we can expect crude to rally at least to yesterday’s levels if not higher.
The drop in crude can be attributed to imports having fallen to an abysmally low level of 7.5 mbpd. While it could be because crude supplies into the US have genuinely sunk, it could also be due to an inane reason as one ship having docked late and not being reported.
One should also note that refinery runs dropped even further. This could be an indicator that product margins need to improve for crude levels to seriously drop.
The naphtha crack was pretty much unchanged overnight. The March MOPJ crack is valued at $ 1.15 / bbl value. The Singapore crack for March is valued at flat.
The gasoline crack is marginally firmer with the March crack valued at $ 11.65/bbl.
Gasoil prices were marginally lower as well. There are reports that the IPE cracks have firmed post API data. This will hopefully drive more cargos to the west helping maintain stock levels in the east at levels which support firmer cracks.
The March crack is valued at $12.4 / bbl with the regrade at -$0.60 /bbl.
Fuel oil continues to trade in a lack lustre manner. The absence of any aggressive demand is slowing pushing the crack lower. The March crack dipped to -$ 3.8/bbl and April around -$ 4.05 /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