This week will see OPEC+’s meeting on Sunday, June 02, which has already seen key market players make various notable moves. In anticipation of the meeting, the four-week average amount of crude exports coming From Russia With Love have declined for a third consecutive week. Furthermore, central banks and governments should not take their eye off the Thunder-ball, as whilst the US celebrated Memorial Day over the weekend and saw strong consumer confidence data, global markets are beginning to be defined by broad risk aversion as bond yields rise. Indeed, whilst Diamonds Are Forever, the gasoline arb’s rally was not, as it came off from highs of 8.90c/gal to 7.65c/gal on May 29 following six consecutive days of price increases. However, the same cannot be said for the US’ rampant oil and gas industry, for whom evidently The World is Not Enough as they have continued the recent trend of enormous acquisitions and consolidation, with Chevron’s $53 billion acquisition of Hess and ConocoPhillips’ acquisition of Marathon Oil for $22.5 billion both being major news items this week. Additionally, Nvidia has provided another Spectre-cle this week, rising even further to reach a market cap of $2.78 trillion, now over $400 billion higher than Amazon and Tesla combined. Can it continue to prop up an unsettled stock market and successfully fight off bearish onlookers who believe it is No Time to Buy…?
Crude was heavily weighted to the sell side with Forties and Midlands continuing to be offered by a variety of players, but the physical differential was maintained between -89c/bbl and -83c/bbl. Interestingly we saw a pattern of Singapore interest pushing up prices in the morning window with it tailing off later in the day for instance May 22 saw prices rally from -28c/bbl to -10c/bbl early on. Jul/Aug DFL was, for the most part, flow driven and rangebound trading between -7c/bbl and -14c/bbl driven by selling of the Jul/Aug dated from hedging. A more bearish week for the Dubai complex with prominent buying of the June Brent/Dubai and selling of Jun/Jul Dubai.
In HSFO, Eastern HSFO was fairly stationary this week, with cracks and spreads both trading in fairly narrow range, however the prompt E/W did trade lower due to European strength. However, the 180 market collapsed and saw a wave of stop-outs, with the Jun VISCO falling to $8.75/mt. In VLSFO, flows were also fairly muted, with prompt Sing 0.5 spreads falling at the end of last week, but subsequently gaining strength from Monday morning onwards. Euro 0.5 flows were also reasonably quiet, although strength returned to the market slowly, raising the Jun/Jul and Jul/Aug spreads up to $2/mt and $2.75/mt, respectively.
The distillates complex has had a week determined in large part by persisting US weakness and has there not been particularly strong, with both spreads and cracks remaining generally rangebound. Muted trucking demand over the Memorial Day weekend has not yet shown up, which usually drives price action. An area where real strength was seen however, was in the Sing gasoil complex, the strength of which caused the Jun Gasoil E/W contract to rally aggressively this week from -$27/mt to just under -$20/mt.
In gasoline, the story this week is one of incredible weakness and length aggressively stopping out of contracts, with this week notably seeing length stopping out of the front gasnaph and RBBR. EBOB has been weak on a paper and physical basis while 92 spreads were sold into contango territory in Jun/Jul and Jul/Aug, the former hitting -50c/bbl. The arb began the week strong but mid-week flipped bearish amid scale back trade house selling.
The week in naphtha saw rangebound markets with low volumes, but stronger petchem flows from May 28-29 provided some support despite weak margins. The Jun NWE naphtha crack came off from -$8.40/bbl to -$9.00/bbl with stronger crude. The Euro window on May 28 was very well-offered, with Jun/Jul pushed down from $9/mt to $7/mt, with major buying then seen around the latter level. Additionally, the E/W was one of the week’s biggest movers, which reached highs of $21/mt on May 29, with part of this due to the MOPJ window being bid, alongside Jul spread selling in Europe.
In NGLs this week, the market anticipated, correctly, a build in US propane and propylene inventories, which have largely been priced into LST with significant selling in Jun/Jul LST at 0.375c/gal on May 29. FEI saw a strong start to the week with increased demand from DCE players and petchems on the up, though this was dampened with petchems weakening and the buying dissipating, leading to softened FEI spreads. The CP settle for Jun came out unchanged for propane and weaker for butane, causing the C3/C4 CP to rally to $12/mt on May 30. Finally, US butane has seen a slower week with a removal of last week’s gasoline hedging and fund rolls.
