Gas Oil 1 year $/TonneMonday 12 November, 2018

The fundamentals for kero / diesels improved slightly last week with falling stocks offsetting a modest fall in demand. However, demand is up 6.1% on the year and the US winter appears to be starting early. While the overall pressure on oil markets is downwards due to surging US crude production we expect distillate prices to outperform. Support for the key ICE Gas Oil Future is under pressure and there is a risk of a dip to $650/t.

Gasoline 1 year $/TonneMonday 12 November, 2018

The fundamentals for gasoline remain weak with stocks holding much higher than normal and demand remaining weak. As a result Asian refinery margins for gasoline turned negative for the first time in over six years. The fundamentals for gasoline should continue to weaken into the year end. We expect gasoline prices to continue to under perform.

Crude 1 year $/TonneMonday 12 November, 2018

Crude prices fell sharply last week following the US DOE report which showed rising US crude stocks and surging US crude production. The rise in US crude production was massive, up 400,000 bpd in one week with production surging to 11.6m bpd. This is an increase of over 2m bpd on the year and offsets the OPEC / Russian production cuts of 1.8m bpd which took effect in January 2017. OPEC is now in a "bind," if they cut production to keep prices high they simply encourage an expansion of US production and will lose market share. Brent Crude has fallen to $70/b and we expect some near term consolidation.

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