Distillate cracks surge Wednesday as Brent rallies past $69/b
London (Quantum Commodity Intelligence) - Distillates led the rally in the oil complex Wednesday, extending a recent trend this month, and likely boosted by fresh investors seeking an alternative to tumbling stock markets following a rise in US inflation.
The US Consumer Price Index (CPI) climbed 4.2% in April from a year earlier, the Labor department said, up 0.8% from March, and biggest 12-month increase since September 2008.
The figure was significantly higher than the 3.6% rise economists had predicted and could mean a hike in interest rates sooner than expected.
Stock markets reeled and Brent surged.
The July contract hit $69.66/b by 16.30 UK time, up $1.23/b from the same time Tuesday, possibly reflecting concerns about shortages caused by the Colonial pipeline shutdown, although gasoline cracks in Europe have failed to move this week.
But European distillate futures outpaced Brent, and its crack value continued to climb higher, extending a trend since the start of the month.
Singapore 10ppm gasoil cracks jumped higher in the morning.
The US weekly oil statistics showed mild draws in crude, mild builds in gasoline, and a 1.7 million draw in distillate stocks.
Products
Naphtha cracks for spot and swaps down the curve fell. The cargo price gained $9.50 mt ($1.05/bbl). Propane cargo prices only gained $3/mt, and the spread between naphtha and propane widened to $116.75/mt.
Despite the cyberattack on the Colonial pipeline, the gasoline market seems more focused on continuing stock build sin the US. Premium unleaded barges gained only $4/mt (48cts/b) and its crack value tumbled. Cracks for Eurobob barge swpas at 16.30 UK time were also little changed, and their value fell as a percentage against Brent.
Jet barges traded in FARAG at June LSG plus $22 and $21/mt to set value. Flat prices benefited from the gains in underlying futures.
May Low Sulfur Gasoil futures expired to leave a small volume for expiry, but the remaining June and July contracts jumped $12.75/mt. The June calendar month value for LSG was up $1.68/b by the settle compared to Brent's rise of $1.23/b. Diesel barges in ARA traded between $2.25/mt and $2/mt below June LSG.
Prompt high sulfur fuel oil barges in ARA traded 12,000 mt at an average of $376.67/mt. There was no trade in marine fuel (0.5% sulfur) but it was bid at $487 and offered at $488/mt.
