Iran Update – 15th April – 17:00 CET – Finally some proper US stock draws
‘- Lots of back and forth today on the headlines with talks (and plans for talks) likely to be protracted and both sides driven to pull oil prices in opposite directions. Some oil prices currently send the message of lasting peace, which of course remains to be seen.
– Of interest has been the hefty sell-off in Singapore gasoline and diesel pricing relative to the West over the course of the week. It could be that a flurry of cargoes sent over the last months has now arrived, while Asian run cuts are still yet to ramp up to their likely full extent assuming that the SoH closure lasts. Perhaps the draw down of oil on water, plus draws on commercial and governmental crude inventory in Asia where necessary, are slowing run cuts temporarily.
– Slow run cuts plus rapid demand loss (government action + price-induced) could see temporary relative price weakness persist for a little while over in Asia. But make no mistake, the loss of AG crude will necessitate lower and lower Asian refinery operations over time, so Eastern product pricing may well rapidly correct back.
– Over in the US, we have finally started to see some proper oil stock draws, including SPR in the mix. Draws exceeded 2 MBD last week. US crude exports are soaring in the weekly data as expected, with Asian demand for WTI running hot. Meanwhile US product exports are high, also as expected. A curious drop in US runs (despite likely decent margins) is making things worse on the product side. So while the HOGO has been pricing low to help US distillate exports work globally, this may not last for much longer with PADD-1 (and PADD-3) inventory liable to be draw down quickly from here.
– It makes perfect sense that US oil is being drawn upon globally; but US prices will eventually, perhaps quickly, rise to defend their own inventory. The global supply crunch is yet to be felt in full force.
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