Flat price crude faced significant pressure in June with WTI and Brent struggling to stay above $70/bbl and $75/bbl respectively.

The underwhelming performance in flat price is in line with a bearish macro picture and a weak crude physical market, reflected in continually suppressed DFLs and talk of plentiful physical offers in the Singapore MOC. Clean products bucked the trend, with prompt ICE gasoil cracks and EBOB cracks chasing each other higher in recent weeks.

There is now a tug of war taking place between strong gasoline and diesel markets and crude, which cannot seem to sustain a rally.

All eyes now on Q3: refinery runs seasonally take a big leg up over this period, so the question will be whether this will be enough to clear the crude overhang.

July EBOB Crack

July GO Crack

Light Ends

Naphtha cracks continued their epic fall from grace through June, sliding for a third month in a row. Jul/Aug Nap NWE has fallen to -$5.25/mt. At these levels of contango, traders have incentive to convert tanks in ARA from other products to store Naphtha, but nonetheless market remains desperately weak with July cracks dropping at least $6/bbl down to -$15.00/bbl during month of June.

Jul/Aug Nap NWE


The market seems to have unanimously concluded once again that stocks are too low in all price centres for spreads to weaken materially. June saw spectacular performance in OTC distillate markets with traders rushing to cover any Q3 shorts. Whereas some traders were positioning previously for negative 10ppm barge diffs in ARA, sentiment has shifted back again to an expected strong second half of year. All eyes on physical markets to see how things perform as Asian refinery runs pick up in Q3. There could be volatility in store for distillates, as macroeconomic concerns put the demand side of the equation in focus.

Fuel Oil

Fuel Oil cracks, performed well in June. July 3.5% FO Crack traded from -$12.00/bbl up to around -$7.00/bbl, where Tallarium data shows there are multiple offers stacking up.