In the wake of mixed DOE data, crude prices ended a very choppy day with mixed sentiments. Brent settled 28 cents lower at $ 51.82 / bbl. WTI however, rose by 6 cents to settle at $ 49.62 /bbl.
The DOE data surprised the markets in more ways than one. While crude stocks drew a lot more than expected (and with API having reported a build), the market immediately jumped up 50 cents higher. However, a huge build of gasoline and distillate stocks acted as an effective cap on any bullish sentiment the crude draw may have generated.
The DOE in its weekly report yesterday, stated that crude inventories had dropped by 3.6 million barrels to 528.7 million barrels. Gasoline stockpiles rose by 3.4 million barrels to 241.0 mb. Distillates too, rose by 2.7 million barrels to 150.9 mb. The comparison vis a vis expectations and API data is below
These stock movements need to be viewed in the backdrop of a utilization rate of 94.1% which is the highest seen at this time of the year.
The message from the above statistic seems to be that at current demand levels, there is no issue of shortage of gasoline. Indeed, gasoline stocks are almost at all time highs as can be seen below.
If we look at previous years, from around this time onwards we have been seeing sharp draws in stocks as the gasoline season gets under way. This phenomenon was conspicuous by its absence in the last year.
Another factor to be noted is that crude oil imports increased by 1.1 million barrels per day to 8.9 million barrels per day. The question to be asked then is, in the light of production cuts, where is all this oil coming from?
We would therefore maintain our bearish outlook on crude oil prices pending any new data.
Physical Naphtha prices eased a bit yesterday, arguably in the wake of projected gasoline build. However, the demand for naphtha could remain strong. Paper cracks however, eased by around 30 cents. The Japan Naphtha Dubai May continues to hover around – $ 0.4 /bbl. with Singapore Naphtha – Dubai crack at -$ 2.0 /bbl.
Gasoline cracks have taken a severe beating in the wake of the DOE data. The May crack is valued at $ 10.90 /bbl today. The May-June spread is still valued at 40 cents / bbl.
Gasoil cracks too are weaker today. The May crack is valued at $11.50/bbl. The regrade has weakened to -$ 0.60 /bbl for May.
180 CST Fuel Oil
Fuel Oil was the only product whose cracks offered some joy to refiners even as trading in physical cargos is slowing down. Just 3 cargos of 380 cst Fuel Oil were traded today which is the fewest this month. The value of the May crack is steady at -$ 3.5 / 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