Oilytics Charts of the Week: Week 8

Chart 1:

The collapse in energy prices across the board continues to be rapid and unprecedented. With TTF below €50/MWh, only Asian LNG and Diesel are now above $100/boe. Global energy price weakness continues to benefit the global economy as recession fears recede.

Chart 2:

Indian refinery run hit a record high in January 2023 as it continues to take in record amounts of Russian crude, and domestic demand remains strong. Despite record high runs, private sector refinery runs remain ~0.2MMBD below its peak. The bulk of the gains continues to come from state run refiners such as IOC as it benefits from access to cheap Russian crude. (Source: PPAC)

Chart 3:

Naphtha cracks have rallied sharply in recent weeks as it has mean reverted to its historical seasonal range after trading at record lows post-invasion. With distillate cracks sharply falling recently, products like Naphtha have rebounded to offset the drop in middle distillate cracks. In addition, Russian naphtha being capped at $45/bbl and changing trade flows continue to structurally change the market.

Chart 4:

With oil prices off its 2022 highs and the dollar index also 10% off its highs, the oil price drop in various currencies has been sharper. Except for the Indian rupee, currencies of the large importers in their local currencies are now below the 2008 peak. For example, oil prices in Euro and GBP were 30% higher than the 2008 peak in June 2022 but are now -15% below the 2008 peak. Similarly, with Rupee, prices were 50% higher from the 2008 peak and are now at 8%.

Chart 5:

US commercial stocks are on track for one of the fastest build ups gaining over 58MMBBLS over the last 7 weeks. Similarly, with cushion, it gained by 15MMBBLs over the last 7 weeks. Despite the rapid build-up, if including SPR stocks, total crude stocks remain near muti year lows. However, despite record-high crude exports, the crude builds up remains a challenge to the bullish narrative (Source: EIA)