UBS I- Asia Oil Explorer -WTI crude reaches 28-month high �

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UBS Investment Research
Asia Oil Explorer
WTI crude reaches 28-month high
􀂄 US crude stocks rise slightly, product inventories down
WTI crude oil prices rose 12.5%, ending last week at US$97.0/bbl, while Brent
prices rose 9.7%, ending last week at US$112.1/bbl. Crude prices rose due to loss
of oil supply from Libya, but retreated on Friday on reports that Saudi Arabia has
increased production to make up for the loss. According to the US Department of
Energy (DOE) for the week ended 18 February, crude inventories rose 0.8mbbls to
346.7mbbls vs. Reuters’ consensus of a 1.2mbbls build. Gasoline inventories fell
2.8mbbls after reaching a 20-year high, while distillate stocks fell 1.3mbbls.
􀂄 Refining margins improve WoW
The Reuters Singapore complex refining margin index averaged US$7.4/bbl last
week, up from US$6.6/bbl the previous week. Gasoline spread remained flat WoW
at US$11.1/bbl. PTA-PX spread rose 7.5% WoW to close at US$241/t, while PVCVCM
spread rose 3.0% to US$344/t. PX spread to naphtha fell 12.4% WoW to
close at US$721/t after the recent run up. HDPE and ethylene spread (to naphtha)
fell 16.9% and 9.2%, respectively, WoW.
􀂄 E&P stocks have outperformed in the past month
For the month ended 25 February and based on simple average performance, E&P
stocks in Asia under UBS coverage rose 0.5%, while, on an average, integrated
stocks rose 0.2% and refining stocks fell 0.4%.
􀂄 Top picks
Our Most Preferred stocks in Asia are COSL, SinoTech, Essar Oil and Thai Oil.