Oilytics Weekly Chart of the Day recap: Week 4

Chart 1:

Weekly spec length surged on the back of China optimism and funds pilling in as open interest surged across all the key contracts in the new year. The combined weekly increase was the biggest since November 2021. Despite the sharp increase, net spec length remains at low levels. (Source: ICE and CME)

Chart 2:

Combined refinery runs from India and China hit the highest level since November 2021. Dec22 runs came in at 19.46MMBD (14.2 from China, 5.3 from India) and it was 0.36MMBD shy off the record high. With China and India both experiencing strong local demand and access to cheap Russian crude, we should expect refinery runs to hit 20MMBD+ in 2023. (Source: PPAC and NBS China)

Chart 3:

European gas prices continue to get weaker and especially against Diesel. LNG is just below Diesel on a BOE equivalent basis, while UK NBP and Dutch TTF are at 80% of Diesel. Despite cold weather, ample storage and expectations of Freeport LNG restart continue to keep gas prices significantly under Diesel.

Chart 4:

US crude and main product exports hit the highest level this year. Crude exports were the main driver behind this, hitting 4.7MMBD despite SPR sales now halted. Distillate exports came in at 1.1MMBD, having hit a peak of over 1.7MMBD in 2022, while Gasoline exports came in at 0.9MMBD, having hit a peak of 1.2MMBD in 2022. The US continues to be a crude and refined product export powerhouse, helping resolve the change in oil flows post Russian invasion.

Chart 5:

With the EU’s ban on Russian product exports only a few days away, Gasoil East-West spread will be in the spotlight again. Gasoil EW (Sing Gasoil MINUS LS Gasoil) recovered to ~-5/bbl from last year’s lows of -$10/bbl. However, with China exporting more diesel and if Russian diesel is sold at huge discounts to Asia, this spread could widen beyond last year’s lows.