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SPR-U-Kidding Me?

3 min read

Oil finally soared over $150/bbl as the US raced to fill up the SPR to 2022 levels… and then I woke up. It was a crazy couple of hours as traders asked themselves “What the hell does Jennifer Granholm mean?” and the answer was clear – she doesn’t know what she means. The market did not, in fact, fly to levels not seen in years on Mar 18. May Brent gently rallied to over $87.50/bbl on Mar 19 before a natural correction to $85.75/bbl on Mar 21 as prices felt the squash from a reinvigorated dollar. EIA stats continued to show a strong demand story State-side, as there was another EIA-reported draw in crude stocks of 1.952mbbls, greater than expected and Cushing inventories posted another draw, of 18kbbls. Gasoline also saw a good draw of 3.31mbbls which may further contribute to the healthy refinery margins. Margins have really been the talk of the town, with Europe on a tear since the start of the month, rising from lows of $9.15/bbl on Mar 05 to break into the $11/bbl handles come Mar 18.

In crude, we saw the physical drop to sub-zero territory for the first time since Jan 2024. By contrast, structure continued to be strong fuelling bullish expectations for the phys. In CFDs, the prompt remains week with players hammering down front Apr rolls in line with a weak phys. Sentiment around May rolls is generally bullish. While the Bal-Mar DFL was more rangebound, DFL structure came under pressure amid a softer futures market. Brent/Dubai weakened at the start of the week but remains predominantly rangebound. In US grades, sweet grades saw a softer performance due to a weakening WTI Houston physical. While sour grades saw firmer price action, YV structure remains in deep contango.

In HSFO, the 380 market softened this week amid fears of Chinese demand at current flat price levels. The 380 E/W also came off in the prompt but saw support from Q3 E/W buying at -$1/mt. The barge crack was more rangebound and spreads were sold off, despite stronger crude. In VLSFO, fears continued in the prompt Sing 0.5% amid large size flat price selling from a trade house in the window. Euro 0.5% barges saw similar weakness although were more supported than their Asian counterparts – taking the prompt 0.5% E/W as low as $41.50/mt on Mar 20. 

In distillates, the ICE LS gasoil complex opened stronger into this week but saw a significant sell off mid week, despite freight roofing. Weaker ICE gasoil strengthened the gasoil E/W but to a more muted degree due to subdued 10ppm gasoil sentiment. We saw airline hedging flows and combo buying from Apr to Dec in Asia triggering a rally in regrade and regrade rolls. Euro jet continues to be weak amid tensions of oversupply but sentiment has improved as we inch closer to summer travel season. HOGOs climbed up despite bearish stats because of ICE gasoil weakness.

In gasoline, the greatest story has been from the East as the phys players who were repeatedly offering down the front Sing 92 spread are now covering their shorts as price action for Apr/May rebounded from 50c/bbl lows to 125/bbl. In Europe, spreads have been more balanced, with sentiment in summer remaining bullish whilst the front is lagging. Gasnaphs is both regions have moved up.

In naphtha, MOPJ spreads have been far weaker than NWE spreads, in turn E/W structure has completely dumped into single digit territory, printing lows of $7.50/mt. The Apr/May E/W box has also been heavily offered, pressuring the prompt further. Cracks have been slightly better supported recently on the back of lower crude. Petchems have been really weak, with good toluene disproportionation margins driving a huge oversupply of PX.

NGLs saw a relatively supported LST structure, led by arb buying and physical players happy to add length at these levels, with offers in the phys window getting lifted. FEI premiums have also increased, with H2 Apr FEI trading at Apr FEI +$11/mt. FEI/CP has been better offered given good CP buying, yet a low CP settle could prompt support to the contract.

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Our team of skilled analysts, by utilising the depth and breadth of Onyx's proprietary data, position ourselves at the cutting edge of market analysis. This unique vantage point grants us an unparalleled perspective in the market, enabling us to identify emerging trends and lucrative opportunities.