Oil prices softened in the early trading session today. ICE Brent declined for a third consecutive session with prices falling back to US$85/bbl, as a stronger dollar and profit booking at higher prices weighed on prices. According to media reports, the US has urged Ukraine to halt attacks on Russian energy infrastructure to avoid potential retaliation and to keep the energy market stable. Meanwhile, Houthis have also been reported to assure China and Russia that their ships can sail through the Red Sea without risk of an attack.
The latest data from Insights Global shows that refined product inventories in the ARA region increased by 45kt over the last week to 6.05mt. Naphtha inventory increased by 97kt over the reporting week followed by marginal gains in gasoline and fuel oil stocks at 8kt and 6kt, respectively. Gasoil inventory dropped by 60kt over the week, offsetting some of the inventory builds in other products.
Meanwhile, data from Singapore showed that total refined products inventory fell by 0.5MMbbls (-1% week-on-week) to 47.5MMbbls over the week ending on 20 March 2024. The decline was led by middle-distillate and light-distillate with inventories falling by 0.4MMbbls (-4% WoW) and 0.8MMbbls (-5% WoW), respectively, over the reporting week. Residual fuel inventory rose by 0.7MMbbls (+3.2% WoW) to 22MMbbls for the period mentioned above.
For natural gas, the EIA reported an inventory injection of 7Bcf for the last week, higher than the market expectations of around 5.4Bcf of injection and a five-year average withdrawal of around 42Bcf for the week. Last week’s inventory build probably marks an early end of the withdrawal season this year as warmer weather keeps demand low. The US recorded just 121 Heating Degree Days (HDDs) last week compared to the seasonal average of 157. Natural gas inventories are 41% higher than the five-year average for this time of the year pointing to lower demand for restocking this summer. The latest weather forecast remains mixed, suggesting colder-than-average temperatures in the western region while the East could remain slightly warm for the next week in the US.
