Crude prices tested the support at $ 50/bbl for Brent and rebounded from there to finish marginally lower. Brent settled at $ 50.75 / bbl, 5 cents lower, while WTI settled 24 cents lower at $ 47.73 /bbl.
While the market appears to be awash with crude and likely to stay so, the longs in the market are certainly facing less liquidation risk as of now as compared to a month ago. The ratio of long positions to short position is a far more manageable 4:1 as compared to 9:1 previously.
Having said the above, the market still seems awash with Crude. Reuters reports that US production has increased by 670 kbd since October 2016. Libyan production has increased by 200 kbd. Nigerian product is steady but is looking to increase. The level of production cuts would be of the order of 1500 kbd. Hence the net impact on supplies is about 50% of what was expected. And this gap is expected to reduce going forward.
The only hope for crude prices is that huge product draws improve cracks. Which in turn prompt refineries to run more. Which will increase crude consumption and drop stocks.
The physical Naphtha crack firmed up today. The MOPJ crack for April is valued at $ 0.9 /bbl. The Singapore Naphtha crack for April is around -$ 1 / bbl.
The gasoline physical crack strengthened yesterday. However, the forward curve is virtually unchanged.
The gasoline crack for April is valued at $ 11.25 /bbl. The May – June spread is valued at 30 cents.
The Fuel Oil cracks continued to drift lower as supplies were seen as more than plentiful in the window. The current value for the April -$ 4.25/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