Crude Oil

Crude prices continued their strong rally yesterday in what the market regarded as bullish indications from stock reports.  Brent rose by $ 1.09 / bbl to settle at $ 51.33 / bbl. WTI rallied by $1.14 /bbl to settle at $ 49.91 /bbl.

DOE Data
The DOE, in its weekly report of US stocks yesterday reported crude stocks had increased by 867 kb. Gasoline drew by 3.7 million barrels while distillate stocks fell by 2.0 million barrels.

While crude stocks did build, the build was significantly lower than expected. Product stocks, on the other hand drew a lot more than expected.This information, combined with the supply disruption in Libya was good enough to give the market cause to buy eagerly.If we take a step back and look, the draws in product stocks is definitely a bullish sign.  Refinery runs increasd by 1.9% to 89.3% of total capacity as they come out of turnover. The extent of gasoline draw, notwithstanding the increased refinery run rate is certainly indicative of good demand growth as we enter the driving season.In other bullish news, OPEC compliance for March is expected to be at 95% levels.  This is extremely good for the cartel as it has helped them get a 10 – 15% increase in prices for 3 months now.Are we actually seeing a turn around in the supply demand balance?  It is a bit too early to tell, in our opinion, even though the big research houses are urging all of us to believe so.  Nevertheless, personal beliefs apart, it is important to listen to what the market is saying because, at the end of the day, that is what matters to us.


The Naphtha physical crack improved further as traders experienced a shortfall in supplies as compared to demand. Cargoes for the 1st half of June are backwardated by around $ 2.5 /MT to cargoes for 1H May which is the highest level of backwardation seen for  Naphtha in a while
The MOPJ crack for April is valued at $ 1.1 /bbl.  The Singapore Naphtha crack for April is around -$ 0.75 / bbl.


Gasoline cracks have firmed up in response to the stock draws in the US. April is valued at $ 11.9 /bbl.  The May – June spread is valued at 38 cents.

We would take a deep breath, stick our necks out, and still recommend selling the May June spread.  Demand in the US notwithstanding, we have a feeling that stocks from China will be more than sufficient to offset any anticipated demand.

Middle Distillates

Gasoil cracks eased marginally .  The crack for April is valued at $ 11.5 / bbl.  The April regrade however improved and is now valued at  – $ 0.45.  The regrade for May has recovered to $ 0.0 / bbl.

Our bias for the regrade continues to remain from the bullish side

180 CST Fuel Oil

Fuel Oil cracks recovered a little today. Traders nevertheless believe that the upside for the crack is limited for now.  The Fujairah Oil Industry Zone reported  a rise in inventories of heavy distillates and fuel oil of 12.33 million barrels.

The current value for the April crack is  -$ 4.05/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


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