OIL PRODUCTS: Oil Products Summary At European Close: Cracks Diverge
Apr-10 15:28
Gasoline cracks are reversing gains seen yesterday as the market assesses ongoing trade friction. Diesel cracks are slightly higher on the day, with underlying product prices falling slower than crude.
- US ULSD crack up 0.1$/bbl at 26.64$/bbl
- US gasoline crack down 0.5$/bbl at 22.69$/bbl
- US 321 crack down 0.3$/bbl at 24.07$/bbl
- Taiwan’s Formosa refinery is operating at 68% capacity this month, or 370k b/d, due to planned maintenance at one of its refining units, Reuters reports.
- The 160k b/d Komsomolsk refinery in Russia’s Far East continues to operate after a fire earlier April 10, according to TASS, cited by Bloomberg.
- The 177k b/d Citgo Lemont refinery reported a flaring event due to a unit upset, according to a filing submitted to the Illinois Emergency Management Agency.
- Singapore’s fuel stockpiles rose by 1.3m bbls to 47.3m bbls in the week of April 9, according to Enterprise Singapore data cited by Bloomberg.
- China’s daily gasoil consumption will continue to fall on the year in April, declining by around 5% compared to 2024 levels, according to OilChem.
- Faster unwinding of OPEC+ cuts comes as a clear benefit to European refiners who are heavily reliant on Middle Eastern crudes, Kpler said.
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US: SFR Call spread
Mar-11 15:24
SFRM5 95.75/96.00cs 1x2, bought for -4 and -3.75 in 4k.
BONDS: FX-Hedged Yields Remain Unattractive For Japanese Across Most Markets
Mar-11 15:17
In trend terms, Japanese investors continue to favour the safe haven status of U.S. Tsys and are willing to buy gilts on pullbacks, while they remain more cautious on EGBs.
- Across U.S. Tsys, the major EGBs and gilts, only BTPs offer a pickup vs. 10-Year JGB yields when rolling 3-month FX hedge costs are accounted for, although the gaps have narrowed in recent months.
- Japanese participants are relatively small players in the BTP market, with Japan’s monthly BoP data pointing to cumulative net selling of Italian paper in the 12 months through January.
- 10-Year OATs generate a small FX-hedged yield stepdown vs. 10-Year JGBs, which, when coupled with a political and fiscal uncertainty premium, may not make for an enticing investment offering for Japanese investors. Accordingly, BoP data shows Japan as net sellers of French bonds in 10 of the last 11 months.
- Japan is also a net seller of German paper over the last 12 months. The desire for looser fiscal policy in Germany is unlikely to reverse that trend in the short-term, although a further step up in yields could help entice Japanese participants when the German fiscal outlook becomes clearer.
- U.S. & UK bonds continue to benefit from Japanese inflows, with only fairly isolated rounds of monthly sales visible when going back over the last 12 months.
- Not all of these flows will necessarily be FX-hedged, given the stepdown in yields that hedging typically generates vs. JGBs.
Fig. 1: FX-Hedged Yields From The Perspective Of A Japanese Investor
Source: MNI - Market News/Bloomberg
EQUITIES: Estoxx Put Fly
Mar-11 15:15
SX5E (21st Mar) 5000/4900/4800p fly, bought for 2.5 in 20k.
