Brent recovers some lost ground, HSFO cracks fall again

Brent recovered Thursday some of its lost ground following yesterday's Energy Information Administration that revealed a large build in US gasoline stocks and a drop in implied demand, but there was a mixed reaction in European oil products.

Some light end products dropped lower in the wake of the gasoline data, softening crack values sharply.  

But crude prices remained closer to the bottom of their recent trading band, and bearish sentiment was stoked by Iran and the United States holding talks with other powers on reviving a nuclear deal that almost stopped Iranian oil from coming to market, reviving tentative hopes Tehran might see some sanctions lifted and add to global supplies.

Front month Brent was trading around $62.83/bbl by 16.30pm UK time, up 84 cts/b from the same time yesterday.

Products

Eurobob E5 gasoline barges in AR traded at around $4/mt below the May swap throughout the day, and ended averaging $602.50/mt, down $4.50 from Wednesday. The May Eurobob paper was trading at $608.50/mt by 1630pm UK time, up $6 (72 cts/bbl) from the same time Wednesday, softening its crack value versus Brent futures. Premium unleaded gasoline barges were also up $6/mt at Thursday's close, softening slightly versus crude.

The naphtha crack weakened sharply with CIF cargoes in north west Europe only gaining $2.50/mt.

But middle distillate cracks improved, with the gasoline build in the US likely to deter the ramp up of Gulf Coast refining capacity, and trim some of the trans-Atlantic diesel exports

Jet barges continued to command a small premium over delivered cargoes into north Europe, and aviation refining margins inched higher.

There was a very mixed bag in the fuel oil market. The distillate blended 0.5% sulfur marine fuel followed the distillates higher. But high sulfur fuel oil barges were little changed, and crack values dropped sharply as the market continued to expect an increase in sour crudes on global markets after OPEC decided to increase production in the second quarter from the first.