23 Mar 2017
oil-barrel

Crude Oil

Brent Crude finally found support at the psychological level of $ 50/bbl in the face of bearish DOE data yesterday.  It settled at $ 50.64 / bbl, down 32 cents after hitting a low of $ 49.71 /bbl during the session..  WTI settled at $ 48.04 /bbl., a drop of 20 cents.  The session low for WTI was $ 47.01 / bbl

 As we have been saying for some time, the only event that can prop up crude prices is increased consumption of products which will cascade into increased refinery utilisation which in turn will lead to draw down on crude stocks.

However, that is going to remain a challenge as countries like Libya and Nigeria strive to increase production. Libyan production is back to 700 kbpd after it recovered the Es Sider and Ras Lanuf ports.  They hope to increase production to 800 kbpd in April.

DOE Inventory Data

DOE reported a crude build of 5 million barrels against an expectation of a build of 2.8 million barrels.  Gasoline stocks fell by 2.8 MB (2.0 MB) while distillate stocks fell by 1.9 MB (1.4) MB

Domestic production is now at 9.13 MBPD, the highest level in over a year.  Over the last 5 weeks, this has grown by 150 Kbpd.  It is not unreasonable to expect further growth over the next few months.Refinery rates grew to 87.4%. However, this growth is neither enough to slake the demand for products nor is it enough to completely utilise the crude coming in. Looking at very simplistically, let us use the 3:2:1 crack as a basis.  To provide enough fuel to neutralize the draws, 1 million barrels of crude would have to be consumed.  That would still leave a build of 4 Million barrels.

A Stock level of 533 million barrels is seriously too high at this time of the year for the US.

Price action today should be interesting.  We do not seriously see a major rise is prices from here today barring exceptional news.  We will essentially be traversing between 3 numbers in our opinon.  A support of $ 49.98 /bbl, the 50 WMA of $ 50.92 / bbl and a resistance $ 51.40 /bbl which is the 200 DMA

Our bias is to the downside.

Naphtha

The physical Naphtha crack settled higher today amid strong demand and weaker crude prices.  On the paper side this has resulted in a marginal improvement in the Naphtha cracks. The MOPJ crack for April is valued at $ 0.9 /bbl down 5 cents over yesterday.  The Singapore crack for April is at -$ 0.85 /bbl.

Gasoline 

Gasoline demand too improved from West Africa.  The gasoline crack for April improved in value to $ 11.40 /bbl.  The May June spread, which we had recommended to sell, traded marginally higher yesterday at 35 cents.

Middle Distillates

Gasoil cracks eased up as supplies continue to be abundant.  The low level of the regrade could be prompting refiners to drop some of the kero cut into the gasoil pool.  The result is a weaker gasoil crack and a marginally firmer regrade.  The April crack is valued at $ 11.05 / bbl.  The regrade value for April has also improved  -$ 0.25.  The regrade for May jumped up 15 cents and is now valued at + $ 0.15 / bbl
180 CST Fuel Oil
Fuel Oil cracks strengthened today in the wake of good prompt buying.  Notwithstanding the abundant supplies, the undertone for the market remains bullish.  The April crack is valued at  -$ 3.7/bbl today.

Arguably Singapore stock reports today will swing the cracks more/

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

 

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