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UBS Investment Research
Asia Oil Explorer
Oil falls despite bullish crude inventories
„ US crude inventories decline five weeks in a row
WTI crude oil prices fell 3.7%, ending last week at US$88.0/bbl, while Brent
prices fell 1.1%, ending last week at US$93.3/bbl. Oil prices were pressured by the
dollar getting stronger against the euro. According to the US Department of Energy
(DOE) for the week ended 31 December, crude inventories fell 4.2mbbls versus.
Reuters’ consensus of a 1.8mbbls draw. Over the past five weeks, crude stocks
have declined by more than 24mbbls, making this their biggest five-week decline
since mid-2008. Products inventories rose this week, with gasoline stocks rising
3.3mbbls and distillate stocks by 1.2mbbls.
„ Refining margins improve slightly
The Reuters Singapore complex refining margin index averaged US$6.5/bbl last
week, up from US$6.1/bbl the previous week. Both gasoline and diesel spread
versus Dubai were up US$0.5/bbl WoW, while fuel oil spread rose US$1.1/bbl.
Ethylene and benzene spread (to naphtha) rose 11.7% to close at US$361/t and
US$218/t, respectively.
„ Integrated stocks have outperformed in the past month
For the month ended 07 January and based on simple average performance,
integrated stocks in Asia under UBS coverage rose 4.7%, while, on an average,
refining stocks rose 1.4% and E&P stocks fell 0.8%.
„ Top picks
Our Most Preferred stocks in Asia are PetroChina, S-Oil, Thai Oil, Essar Oil, and
Formosa Chemicals & Fibre.
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