Gasoil ($/t)Friday 18 May, 2018
The fundamentals for distillate remain firm supported by falling stocks and solid demand. According to the DOE report US total distillate stocks fell by 100,000 barrels and are now 20mb below the five year average. Distillate stocks should be close to the seasonal low and attention will be focused to see if stocks can recover after a much larger than normal draw-down during the spring. Demand remains firm and prices look well supported. However, the key ICE Gas Oil has reached interim resistance at $700/t. and a period of consolidation is expected.
Gasoline (cents/g)Friday 18 May, 2018
The fundamentals for gasoline improved slightly with lower stocks offsetting lower demand. As a result the days cover was little changed. However, the data is more bullish than it looks. Stocks have fallen much faster than normal during May and demand is posting growth on a year on year basis for a fifth week. With the driving season set to commence next Monday and the oil price graphs looking bullish we believe we are heading towards even higher prices and note that NYMEX Gasoline looks very bullish on both a medium and long term basis.
Crude ($/b)Friday 18 May, 2018
US crude stocks have likely reached the seasonal peak for the year while US demand is set to rise sharply in Q3 as the driving season commences. As a result the risks to crude prices are to the upside. Combine this with the prospect of a hot summer ahead in the Middle East with tensions already running high and bullish graphs, the price risks remain to the upside. Although Brent Crude has reached interim resistance at $80/b we believe the bulls wouldn't stop here and further gains are likely.