US gasoline cracking price gap continues to fall, API inventory growth higher than expected
Yesterday morning we suggested that the adjustment of crude oil is not over and there may be a significant correction. WTI fell 6.07% yesterday. API inventory growth was higher than expected, adding to the decline in crude oil. Yesterday’s API inventory report showed an increase of 8.73 million barrels in crude oil, 1.12 million barrels in gasoline, 6.91 million barrels in heating oil and 3.37 million barrels in Cushing. With the recovery of oil prices, crude oil production is expected to pick up. The price of more than $30 per barrel will enable some shale oil companies to survive. For prices above $40, the discipline of OPEC + production reduction will be reduced.
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Us fuel seasonal peak demand started flat. Memorial Day usually marks the beginning of the summer driving season in the United States. From last Thursday to Monday, the demand for gasoline in the United States decreased by 1.34% compared with the previous week, and the consumption on Monday decreased by 0.5% compared with the previous week. The consumption of gasoline on this long weekend decreased by 25% to 35% compared with the previous week. Despite the open beaches and the impact of the epidemic, people drive locally, whereas in previous years they travel far away. The price difference of gasoline cracking in the United States continues to fall, while gasoline keeps up with crude oil. In the near future, the price difference of gasoline cracking in the United States continues to fall, indicating that the gasoline price is weak with the rising crude oil price.
The limited boost in gasoline demand after the resumption of work in the United States may be related to the trend of home office. The follow-up crude oil needs to be shaken and consolidated, waiting for the global resumption of work to further strengthen, so as to promote the consumption of gasoline and diesel oil and boost the cracking profit, so that crude oil can have a new impetus to a new level. Short term attention Brent 08 contract support around 34-35, SC due to the relatively strong depreciation of RMB. The crude oil monthly spread weakened. In the middle of May, Brent’s monthly difference between January and February strengthened to – 0.24, the highest since the middle of March this year. The recent high volatility of crude oil, Brent’s monthly difference between January and February weakened to – 0.71 again yesterday. Middle East to Far East freight rose 0.17 to 1.81. EFS-0.69。
Industry highlights: 1. Some organizations predict that the global oil market may realize the balance of supply and demand in June;
① Compared with Russia’s news on the recovery of supply and demand balance of oil market in July, some analysts and banks predict that the global crude oil market may achieve supply and demand balance as early as June, with the easing of the epidemic blockade, the reduction of production by top producers and the recovery of demand.
② JBC Energy said: “as we approach June, the market sentiment will further strengthen, and the global net short crude oil position will reach 1.5 million barrels / day, the lowest level since August 2019.”
③ Traffic congestion data from some of the world’s capitals show that gasoline demand has returned to its level a year ago.
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④ The IEA expects the pressure on global storage to ease significantly in the second half of the year. Neil Atkinson, head of IEA’s oil industry and markets division, said: “as we fall into supply shortages in the second half of the year, the trend of inventory filling will begin to reverse.”
⑤ Goldman Sachs said this month that the global oil market would be in short supply in June, adding that the biggest improvement in demand was the use of gasoline for road transport in China, the US and Germany.
⑥ But Austria’s Raiffeisen Bank International is expected to reach a balance by the end of August or mid September, saying that the rise in liquidity so far “will not offset the collapse of demand.”.
⑦ Bank of America’s global research department is cautious about any forecast, saying: “we cannot rule out the second spread of the epidemic and further blockade. Any surplus in the oil market may quickly break this delicate balance.”
2. Wood McKenzie: China’s gasoline and diesel demand is expected to achieve year-on-year growth in the third quarter;
① China’s gasoline and diesel demand is expected to grow year-on-year in the third quarter of this year as the economy restarts on a larger scale, and China’s oil demand is expected to grow 2.3% year-on-year in the second half of this year, wood McKenzie, an international energy consultancy, said Tuesday.
② Wood McKenzie predicted that China’s oil demand will pick up to 13 million barrels per day in the second quarter of this year, up 16.3% on month, but still down 2.5% year on year.
③ Wood Mackenzie said that private cars are favored due to safety under the impact of the epidemic, China is also relaxing the epidemic restrictions on social, commercial and tourism activities, and gasoline demand is rapidly recovering, which is likely to pick up to the same level last year in June.
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