Summary
EBOB cracks experienced a fairly weak fortnight, dropping marginally from $22.40/bbl on Apr 30 to $21.50/bbl come May 06, before the decline accelerated, leaving the contract lurking just above $19/bbl. Interestingly, we saw trade houses initially buying 50kbbls of the crack, but by May 13 their net position had aggressively reversed to -1.1mbbls.
Open interest in the prompt increased across the gasoline complex on a two-week basis, aside from in the E/W. More deferred, every major gasoline contract saw OI in Q3 rise well above the figure from two weeks ago and the five-year average for this time.
Weekly stocks in US gasoline witnessed back-to-back builds of 344kbbls and 915kbbls in the week to Apr 26 and May 03, respectively. Exports, however, declined by 113kbbls in the week to May 03.
Looking at correlations, the greatest change in correlation values have come from E/W contracts. Notably, the strong negative correlation between gasoline E/W and Sing 92 has flipped to a positive value of +0.41, signalling that the Asian benchmark may have been a greater driver this week.
News/Headlines
Following another Ukrainian drone strike on Russia’s Lukoil PJSC refinery in Volgograd on May 12, shutting it down partly, Russia’s Deputy Prime Minister Alexander Novak has stated that the Russian fuel market is stable and that the nation is “fully provided with oil products”. The Volgograd refinery is capable of processing 14.8 million mt of oil per year.
Formosa Petrochemical Corp has reduced its planned run rates this month by ~17kbbls/d on the back of lower refining margins and weaker demand for fuels such as diesel and gasoline.
Nigeria’s reintroduction of previously scrapped fuel subsidies is expected to cost 8.43 trillion naira ($5.9 billion), nearly half of the nation’s projected oil revenue this year, as per the IMF. The subsidies were reintroduced because of high inflation and a devaluation of the naira which fuelled prices to more than triple.
India’s Mangalore Refinery & Petrochemicals (MRPL) has offered 35k mt of RON-95, non-oxygenated gasoline for loading in Jun 03-05 alongside an added 35k mt of reformate for loading in Jun 06-08.
