Refining operations recover as expected

Crude prices were boosted by better growth expectations, embodied by soaring equity markets and hiking bond yields, with the February ICE Brent contract trading above 75 $/b. On the fundamental side, time spreads remained under pressure compared to last month, at a 35 cents backwardation at the prompt, while the API survey showed a crude draw of 3.1 mb and builds in refined products stocks of 4.9 mb for gasoline and diesel. This follows the seasonal rise in refined product stocks, as mobility decreases in the winter while refiners ramp up stocks ahead of next’s driving season.

Japanese weekly oil statistics showed a healthy expansion in crude processing, to 2.79 mb/d, as Japanese crude exports were likely on the rise, with an expansion in crude stocks by 1.9 mb w/w. Other refined product stocks had rather neutral dynamics, with middle distillates stocks expanding slightly.