Talk of OPEC raising production spooks markets lower
Brent tumbled Thursday morning ahead of a half day close before the Easter break as reports seeped out that OPEC would gradually ease its production over the next three months.
Stories circulated that Saudi Arabia was offering to gradually ease its additional unilateral cut of 1 million b/d on top of further easing in the official OPEC and its allies quota.
The Saudis are proposing to lift their production by 250,000 bpd in both May and June.
OPEC and its allies are now expected to ease the official cuts by 350,000 b/d in May, and then possibly by 400,000 b/d in June.
June Brent was trading at $62.93/b by 12.30pm UK time, down $1.45/b from 16.30pm Wednesday.
European distillates futures were dragging behind, with the April Low Sulfur Gasoil futures contract trading $8.75/mt ($1.17) lower than its settle on Wednesday.
Products
Gasoline barges in ARA were a mixed bag amid the differing methodologies. Full day Eurobob E5 gasoline barges traded early morning at an average of $621.5/mt, and a few dollars higher than yesterday. But Eurobob E10 gasoline barges failed to trade and were assessed at $616/mt at the same time as the 12.30pm UK close. Premium unleaded gasoline barges in ARA were very liquid again, and traded between $618 and $625/mt, but were assessed at $619/mt where they traded seven times near the close.
April and May naphtha paper for cargoes delivered into north Europe were both down $10.75/mt from the previous close at $548.25/mt and $542.25/mt respectively.
In the ultra low sulfur diesel market, barges in ARA traded at April Low Sulfur Gasoil minus $1.75, up from a differential of minus $3/mt on Wednesday, and lessening the $8.75 fall in futures.
Jet barges in and around the port of Rotterdam traded at $20/mt above April Low Sulfur Gasoil futures, extending a recent trend of rising premiums after the blockage of the Suez Canal earlier.
Fuel oil took the brunt of the OPEC news, and the expectation of a release of more sour crude onto the world market. High sulfur fuel oil barges in ARA traded between $343 and $345/mt, down from $353.25 and $355/mt on Wednesday, or a drop of around $10.5/mt ($1.65/b).