We present below some of the DOE stock data information and a small analysis of the situation as we see it.
The first thing to note is that crude has been building. While it is arguably too early for the production cuts to reflect in the stock data, stocks are still comfortable. The next point of interest is the fact that refinery runs are at 88.6%. This means that production is slowing down for whatever reasons. The third point, and the one we have been stressing on a lot is the build in gasoline. The levels of builds at the low levels of production is unprecedented.
In short, the US has no need for additional production of material at this stage.
Now, as the crude supply from the world cuts down, the crude supply in the US is growing. In addition, the countries kept out of the cut are increasing production. The rising product stocks round the globe would suggest that there is not additional need for crude elsewhere as well.
Therefore, it is our opinon that the world is currently physically neutral to the cut. Only time will tell how things proceed from here on.
Naphtha prices continued to remain firm and strongly backwardated. However, the crack eased a bit. February is now valued at $1.90 / bbl and March at $ 1.00 / bbl.
Gasoline prices do not appear to have been affected much by the stock builds in the US. Today’s Asian stock reports would probably bear more weight on this number. The February crack is more or less unchanged $ 12.80 cents /bbl.
Middle distillates continued to stay steady. The February gasoil crack continues to oscillate around $11.50 /bbl. The Regrade however is coming in lower at $ 0.20 /bbl.
The supply in the prompt is now creating an overhang. The February crack is valued at -$ 3.2 /bbl while the March crack is at -$ 3.4 /bbl
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