Japanese Fuel Demand

 from Bloomberg

Refinery Margins Poised to Surge After Japan Quake Cuts Power Capacity 9%

Fuel oil’s discount to benchmark Dubai crude, a measure of the cost of turning oil into the refined product, shrank 12 percent in Singapore on March 11, the most in two-weeks, according to data compiled by Bloomberg....
Asian fuel-oil premiums doubled in July 2007 after an earthquake shut Japan’s Kashiwazaki-Kariwa nuclear plant, the world’s biggest, forcing Tokyo Electric Power Co. to consume 59 percent more fuel oil. Seven times more nuclear power capacity was shuttered by last week’s quake, according to Bloomberg calculations. Fuel-oil prices also surged in 2002 to 2003 after Tokyo Electric was forced to close all 17 of its reactors because it falsified safety documents....Demand may also rise for middle-distillate fuels such as diesel, as factories use their own generators to provide electricity, according to Akira Kamiyama, an energy derivatives trader at Mitsui & Co. in Tokyo. Diesel’s premium to Dubai crude, or the crack spread, rose for the first time in four days in Singapore following the quake. The difference was $19.77 a barrel March 11, according to PVM Oil Associates, a broker.
“This is a super bullish factor for the Asian middle distillates and fuel-oil market,” Kamiyama said. “Factories which have their own generating facilities will begin to buy diesel, while utilities will start purchasing fuel oil.”
The quake has shut or disrupted supplies from seven of Japan’s oil refineries, accounting for more than a third of the nation’s oil processing capacity, or 1.6 million barrels of crude a day. Refinery utilization may fall to about 65 percent following the earthquake, from 88 percent beforehand, Wood Mackenzie said in a report on its website.
And courtesy of Reuters....

 click to enlarge

The WTI/ HO crack exhibits a clear 5 wave structure up to the highs. The last 3 days could be the beginning of a new impulse wave up OR merely the (c) of -b- of a larger consolidation. The Brent/HO crack looks a more likely candidate for new highs in the short term.


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