DOE Crude stock
In the middle of the barrel, we have little change in stocks. However, the implied demand has fallen off drastically, in line with API's stats. We are talking about 5 year low at this point. All things point to middle distillate dynamics remaining ugly for the foreseeable future and gasoil crack spreads should be weaker, relative to perhaps gasoline or fuel oil. Diesel, however, is providing some strength within this part of the barrel. It looks like news of Russia's reduction in diesel supply in April is taken to be bullish. What this probably mean is that some of the ever growing US diesel stocks will start to move to Europe and we could see the demand numbers recover a little.
DOE distillate demand
European Diesel vs Gasoil
Now for today, as of noon in London FTSE up over 3%, S&P fut up over 2%, EUR/USD 1.3360, risky currencies being bid up, in particular AUD. Perhaps the new overnight from down under that trade surplus ballooned has got Asia excited as well and took Singapore's index(STI) up almost 6%. The feel good factor is back. As a colleague wisely put it, the Recession is officially over. Risk are being put on. With the start of Q2, funds are piling money into ALL asset classes. Consumers are initialting new hedging programme in the energy space as SFOT has gathered. What this means is that we shall be dictated again by fund money in flat price, while the relative values within the barrel continue to look weak overall.
Aussie trade balance
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