OIL PRODUCTS: Oil Products End of Day Summary: Cracks Climb
Jun-18 18:29
Gasoline cracks have found some support from an increase in weekly implied demand in EIA data, while diesel cracks have moved slightly higher with implied demand also increasing and amid increased Middle Eastern supply risks.
- US gasoline crack up 1.2$/bbl at 21.84$/bbl
- US ULSD crack up 1$/bbl at 31.41$/bbl
- EIA data showed gasoline stocks built 0.21mbbl with a rise in production on the week partly offset by higher weekly implied demand. The four-week average implied gasoline demand rallied back towards the higher end of the previous five-year range.
- Distillates stocks rose as expected by 0.51mbbl with slightly higher production and a dip in exports to offset a rise in implied demand. The four-week average implied distillates demand recovered some ground to pause the declining trend in place since February.
- Israel’s energy minister said that the Haifa oil refinery is expected to return to operation within 30 days.
- Nigeria 650kb/d Dangote refinery is to export the first gasoline to Asia with the sale of a 90k metric ton cargo, according to a Reuters source.
- Syria resumed fuel shipments from its Banias refinery for the first time in over six months on June 16 in a sign of normalization for the country’s energy sector, Platts reports.
- China's exports of oil products, (including diesel, gasoline, aviation fuel and marine fuel) dropped 17.7% y/y to 4.41 million tons in May.
- China may issue the third batch of fuel export quotas for 2025 in July with an allocation of about 10m tons, according to JLC.
- Global implied passenger jet fuel demand in the week to June 23 is seen at 7.13 b/d, up 1.1% on the week and up around 3.9% year-on-year, BNEF said.
- MNI Oil Weekly - Middle East Keeps Oil in Risk on Mode: Download Full Report Here
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US OUTLOOK/OPINION: SF Fed Staff On Price Sensitivities To Tariffs
May-19 18:18
- SF Fed staff research finds that across-the-board 25% tariffs would see a 9.5% increase in near-term prices for investment goods and 2.2% for consumption goods assuming full pass through to finished goods.
- Their research focuses on the near-term direct effects and doesn’t allow for dynamic adjustments including responses of importers, domestic producers, consumers or policymakers as well as potential exchange rate adjustments.
- The analysis includes a breakdown of imported consumer and investment goods and their current reliance on China, Mexico, Canada, the EU and the rest of the world.
- This is useful considering the heterogeneity seen in US tariff policy over the past two months. Recall the push to much larger tariffs on China than all other trading partners on Apr 9, which of course has been mostly reversed with the significant de-escalation in US-China trade policies following trade discussions at the May 17-18 weekend.
- 25% tariffs on China specifically would add ~0.3pp to PCE prices and closer to 1.5% for private investment equipment (PEQ) prices. Both these figures would be higher in the case of 25% tariffs on Mexico.
US TSYS/SUPPLY: 3M Bill Auction Goes Smoothly, "X-Date" Bills Still Discounted
May-19 18:15
Monday's $76B 3-month bill auction turned out to be uneventful.Some had eyed it as a potential warning sign ahead of an "x-date" window in mid-August, after a poor auction a week earlier, but the auction results didn't bear this out.
- The high yield of 4.285% was 1.5bp below May 12's sale, and bid-cover was the highest in 4 auctions at 2.76x. Indirects rose to 59.7% from 48.7% prior (last week's saw one of the lowest % in the last couple of years), with primary dealer takeup dropping to a fairly typical 35.8% (46.6% last week was the highest of 2025).
- On the other hand, potentially of note, the low rate was the highest of the year at 4.18%, up 3bp.
- There remains a very modest bump higher in Aug/early Sept bill yields vs the rest of the curve (about 5-6bp - the high bid yield is 4.374%) indicative of a slight risk premium against x-date risks.
- Per Tsy Sec Bessent earlier this month: "there is a reasonable probability that the federal government's cash and extraordinary measures will be
exhausted in August while Congress is scheduled to be in recess." - As we noted last Friday, The "extraordinary measures" plus cash available to Treasury to stave off a debt default were around $644B as of late last week.
SNB: Schlegel Sounds Pessimistic On Economic Outlook In Latest Comments
May-19 18:03
SNB Chairman Schlegel appears overall rather pessimistic on the economic outlook in Switzerland in today's speech at the University of Lucerne. The Swiss franc was little changed as he spoke. Some key highlights as quoted by Bloomberg:
- "SNB tolerates negative inflation rate in short term" (Schlegel mentioned in the last SNB press conference that the inflation rate can temporarily move into negative territory for individual months.)
- "Inflation outlook is very uncertain".
- "Swiss 2025 growth will be lower than expected". (The latest SNB Swiss growth forecast for 2025 was 1.0-1.5%. Q1 Q/Q (sports-adjusted) growth was already 0.7%)
- Schlegel added: "Tariff situation very challenging for some firms [...] Uncertainty is toxic for growth"
- "Can't rule out use of negative rates again if needed"
- "Franc is bought by domestic and foreign investors"
- "Too much gold on balance sheet not an advantage"
- "There is currently no alternative to US treasuries"
