Episode 90: The market is exhausted. The crisis is not.

[Music] Hey everyone, welcome back to another episode of Trade with Conviction here at Sparta. Today I think, I don't know, I think everyone is exhausted and they left us alone June. Now unfortunately Neil has some, you know, he child care issues and people on holiday, but you know we'll talk more about this, but I think one of the main themes right now in the market is people are exhausted after what's been hell of a couple of months, for sure. Yeah, but you and I, we can't be exhausted, we still have to help the markets explain what's going on. Indeed, indeed, I mean, if we're exhausted, imagine all these traders, it's been, you know, when you, your P&L moves by $5 million, $10 million, I even heard about $100 million moves. Yeah, it's not something that you sleep easy, you know, that's for sure. I like to start today with, there was the FT conference in Los Angeles this week. It's the first time, I, third time I go, generally you don't see a lot of traders, but what's interesting is that you get all of the CEOs of the big shops, Trafigura, Vito, GunVorm, Urquiri are coming up and giving the perspective of the market. And obviously that attracts a lot of people. There was an oil panel with some industry analyst from Trafigura, from GunVorm, you had energy aspects as well. The first thing there is that there wasn't really nothing new, I would say. I think that they were all had the same opinion, that while counting barrels, you've now lost one billion barrels of oil. And that's, it's a fact, it's something that it's worth stating. It's a big number, and that's not coming back. And that demand destruction needs to be seen with the other main topic is that you've seen demand destruction mostly in Asia, but mostly in poor countries. And that's the thing is that one of the narratives was that rich countries will just, you know, do whatever they have to in order to get the oil. And that is obviously an impact for poorer countries. So what we've seen is Asia is demand destruction, but we don't feel it here in Europe, you know. You are in this five-star hotel, in the middle of Luzanne, everything beautiful weather, and things like that. No one really felt like there was any kind of demand destruction. And so the story here is that it's coming. And we should anticipate, you know, work, I think that, sad from Trafigura, I was mentioning something that we discussed a couple of weeks ago, which is the supply destruction that we're seeing right now is very much in line with the demand destruction that we saw during COVID. We're talking about 9 million dollars in 9 million barrels a day and COVID, the average of consumption in 2020 was 9 million barrels lower than 2019. And that gives that perspective of the amount of demand destruction that we should be seeing in the market that they were not yet seeing, particularly in Europe and the US. So there was this sort of story that the market is wrong and it's not appreciating the value of what's really happening right now. And there was this sort of link between the perception from the macro and paper markets. Now again, the story why are we at 100? Everyone would be expecting us to be at 100 and things like that, who stalks at, you know, NASDAQ, SMD, all-time high. I think that there's this confusion between talks and from the financial market that there is a de-escalation going on, mainly on the back of the talks between Iran and the US and all that. But the reality is that the straight is the only thing that we should care about in oil. And on a micro perspective, that's the only thing that people should be caring about in terms of inflation and impact on the economy. But that seems to be sort of sideline because everyone thinks that this is going to be resolved very soon. And when I say everyone is not the panelist and not the oil specialist, but actually the market, you know, the sort of micro markets. And I don't know about you, but I, you know, being in Geneva, I have a lot of friends that work in banks and hedge funds and all that. And every time I'm sort of like, guys, you don't realize the impact of this, you know, and this is going to be dramatic. And everyone is like, come on, it's too big to fail. This cannot be lasting for two months or three months. That was sort of the narrative, I would say, from this oil panelist. I think we are aligned there, right? We are also part of the oil and the least industry where we look at the match. And the match tells you it is a shortfall and it's going to be a huge impact. So I mean, I coined this basically saying that the markets is currently hanging in suspension. You've got this belief happening from the physical side. Why are the people guys not seeing the same as we do kind of environment? Yeah, I don't know. It's an obviously with Trump, you know, the Trump tweets is obviously something that is a recurring topic. And there's a level of exhaustion in the market that's something else that I, you know, that I gathered not from the panel discussions, but actually from the ongoing discussions at the coffee. Everyone was, everyone was pretty much on risk of mode now after one month of high activity. They're now sort of waiting and seeing what's next. And we see that in the prices in the market, there was a risk of happening over the last, you know, a couple of weeks. And the level of liquidity is much lower now. That's something that people were complaining about. But the, you know, as I said at the beginning, that oil panel was basically saying more or less what we have been saying here for the last month and a half, you know, and the, you know, when we think about the key notes speaks from the CEOs, the problem that we had there is that the FT didn't hold their punches and they went directly to the juggler asking, apparently you've lost a lot of money, you know, and, you know, because rumors that some of these big trading houses were wrong-footed at the beginning or talk. What I've heard so far is that I think overall everyone is making money, but not everyone of course, you know, the some asset heavy companies in Asia and the Middle East are obviously suffering some losses, but overall on paper, people have made money, but not like in the Russian crisis. See, it's not like widespread everyone making money. What I heard was that some people got started the year, started the crisis in a, in a short mode, you know, let's not forget that we were, we had a glut and we had all kinds of product everywhere and so they were short, a lot of people and that caught off guard. The other thing that, you know, when you're thinking, you know, when you're in the physical training aspect is let's not forget that a lot of people had vessels that were supposed to load in the AG and they were hedged, so therefore, short on paper, long on physical, and then suddenly all of these suppliers, they started declaring for sure. So that hedge that now suddenly becomes a short. And if you shorted that at 60, well, you know, it's a heavy hit. So I think that we have not seen the end of these sort of like horror stories. They're sort of kept up the wraps right now because there's all kinds of legal battles that would follow from these force measures and all that. So it is something that is is in the top of mind of a lot of these traders for sure, I would say. But coming back to the CEOs, I mean, because they were asked these questions about their T&Ls and all that, they're smart people, they know how to respond and as a consequence, it was all a bunch of platitudes that were not really giving a massive direction in terms of the market and all that. Everyone was quite, I would say the only things that are interesting for what they said was that none of them were very optimistic about a short term resolution, none of them. And we're talking about CEOs of traffic, a toll, a puria, etc. So these are people that are extremely well connected and no one really saw any kind of end of this short term. And I think that the most interesting discussion was with Marco Dunao from Mercurya where I don't know he was on a rampage, you know, what not rampage, but he was very often talking about the market and the guy was basically saying that he's in active communications with the Pakistani, with the Chinese, with the Americans. To a certain extent, he was I'm saying mocking now, he was very purchased, but he was sort of surprised that the Americans would send a couple of businessmen to negotiate with military and with political counterparts with Pakistan and Iran, hoping that a deal could be done in one day. Now he was surprised by this move and so therefore he and the others were not expecting any kind of short term resolution. And finally, I would say that he made some interesting comments about Russia. No one asked him about Russia, but he started saying that Russia was actively participating and giving the strategic support and logistical guidance to Iran. That was quite a statement. What a statement. He also talked about China's situation that China was aggressively selling SPRs over the last two weeks, which surprised the market. His conclusion on that was that first of all, EV has displaced a million barrels a day of gasoline demand in China, so that's one thing to bear in mind. But also that probably the Chinese expected something would happen very soon and he was surprised by that. At the end of the day, I think he didn't say release S-3 selling crude SPR. They have been selling crude that they have or West African crude and then using potentially their SPR to replace. It's not the not that they're selling the SPR. Okay, thanks for that correction, yeah. But it's surprised him. It surprised him and anything surprised the whole market that that why would China be selling now at the end of the day? They will need the oil if it's not now later on. And as you know, as better than anyone else, that China always plays the long-term games. Yeah. Yeah, that was a price. So just to finalize, I think the mood was, everyone was exhausted. That was the first thing. Overall, everyone is making money, but it's not as obvious as it was during the Russian crisis. And that most people were constructive refining margins going forward and that everyone is anticipating quite a lot of demand destruction over the next months, particularly in you know, they're expecting it to happen, you see, and they're all surprised like you and I are that the market or the macro is just like, yeah, I know it's fine, it's going to be okay, you know, and yeah, that's sort of my summary of VFT. So it sounds like a consensus of looming recession as well? Yes, yeah, there was that, yeah, absolutely. Okay, maybe I'll take us through headlines since the last part, seems like an eternity ago really. We started, that was like last Thursday and today we are on Friday. Last Friday, we had the announcement where Trump says the stress is completely open. But look at where we are today. The stress of homework is as sharp as ever from YC. We saw the IRGC firing shots at vessels on Saturday. There was almost no traffic from Sunday onwards, and you got the escalation from the US Navy firing and seizing and Iranian content on Monday. There was no second round of peace talks although it was initially promised by Trump. And then we had the announcement that the ceasefire will now be extended indefinitely. And then since then we had no more ships getting hit by gunfire and US intercepting at least three Iranian flag tankers in Asian waters and redirecting them away from their positions near Indian Malaysia and Sri Lanka. IRGC Navy has claimed yesterday to have cease two vessels after they attempted to navigate without the necessary permits. And we also hear Twitter is alive with all kinds of a straight mining posts, making things even harder if it's true for the strength of almost to reopen. And then on the jet fuel side, we hear even more troubles. We've seen three empty flight cancellation, I would say, to many of the European routes KLM, for example, 160 flights cancelled in May. That's about 1% of the total. European routes, Lupanza is the big one. Twenty thousand summer flights has been cancelled to save on fuel costs. Delta Airlines is cutting trip by 5% of total network. Air Canada is a canceling services from Montreal and Toronto to New York. From 1 June to October 25th. And in Asia, we have Asia X cutting them by the center of the flights. So all these preemptive flight cancellation is part of the solution. And ultimately, barrage for jet when we are seeing high regret pricing right now. Yeah, no, I mean, and as we're saying, you know, this is just the beginning, you know, and it doesn't make the headlines. It's starting to. It's starting to, it's starting to, but you know, you know, what you're seeing is governments talking, at least in Europe, people talking, what are we going to do? And you have like measures like one day a week at home and things like that, but that's, again, we're talking COVID-like demand destruction that we need to see and we're nowhere near that in terms of the general population discussions and things like that. And granted, you know, we had all these stock levels and we'll talk more about battery stock levels later on, but you know, the stock levels of crude and products were very high and we've now consumed that or very close to it. So again, keep an eye on this because that demand destruction should be making it's way and becoming more apparent as we go along over the summer. But then the question is, you know, and then as you put yourself as a trader is that you want to keep going here in terms of prices or are these prices enough to generate that demand destruction? Let's see. We'll see in a couple of months and I think that we're now in this sort of like standoff period where people are sort of waiting to see what happens, you know, the prices are at record highs, cracks, spreads, etc. Much in some cases or in most cases higher than when we were in the Russian crisis. Is this enough? I think that that would be fair question. Is this enough for the demand destruction to happen? Or is it just simply going to happen because there's just no supply and people are adapting? And that's it, you know, we'll see. But then the question is more around the recession and the looming recession and an economic impact. Philippine, since we had this discussion, maybe you can you share with the listeners on EIA data. That's the only observable data in the market. Yeah, exactly. So what's clear is that gasoline and diesel stocks in pad 3 are approaching very low levels. I mean, we're now lower than 23 and we're approaching 22 kind of levels. I would say it's you're very much approaching the sort of like lowest levels in the last five years and it's you know, it's a sharp downward spiral. For diesel, you normally start to build up stocks as we as we go along now in summer, question, you know, but this is not the normal situation. We've never had a supply disruption like the one right now. So, you know, when you look at those charts, you say, oh, maybe it's going to go out now. This is this is different. Let's not forget that during Russia situation, we did not have a supply disruption. We just had a supply exchange, you know, it's like different routes and all that, but we did have the same amount of oil. Our gasoline is even worse because we're now getting also to a sort of, you know, five year low in terms of gasoline stocks as we're heading into the man's season. So that's something to watch out for. USJ surprisingly has not started to draw yet. I supported by higher yields perhaps and a touch of demand witness according to weekly stats. The crude commercial got a reprieve from SPRs and that we all know about, but the total stocks on crude are also coming off. So that's the that's okay. All this quickly also touched on you 20th package of sanctions against Russia. That was announced yesterday, 20th of April. On the oil side, they basically said, you know, there's 46 additional vessel distinct being sanctioned and port infrastructure ran on two Russian ports of more monks and to up see a list of, but most interestingly, for the first time, a third country port, Carimune oil terminal in Indonesia was listed. By the way, Carimune is one of the delivery ports in fact Singapore oil assessments. So it's quite controversial for this particular sanction. And I think Kanandram is we are seeing more Asian governments making direct deals with Russia to get more oil. The latest being Indonesia for up to 100 million barrels at a special price coated and another 50 million barrels of Russian oil is needed later. And indeed, obviously, has been mopping up Russian crude to maintain fairly higher crude intake than the rest of Asia. So in my view, Russia is not likely going to be paid by the new sanctions package. No, definitely not. And, you know, I'm actually surprised that you would, I get it, I get it, but it's surprising that they would do that now, especially as we're entering the phase where the market, you know, and we've said this for the last two, three weeks is that the attention was, you know, the in Asia, but now it's shifting towards Europe. And it's surprising that they would do that now. We know why Karimun was included. Karimun is known to have STS activities and I guess they have detected some illegal activities from the Russian oil out. Fair enough. So what can you tell us about crude? Let's go now into the specific markets price activity. Let's start with crude. Don't tell us what you're seeing there. Crude premiums, they have been coming off for this. We started at dated past 21, one and a half weeks ago. So, but now it's dropped to $10 per barrel. So it's like $11 per barrel for Patamina has awarded three cargoes of June arrival crude arrow, Rabilite, Colet at dated 20s versus the last tender of dated 30s to 40s in the early April tender. So you can see a massive drop in cash premiums. And then we also talked about the crude site just now where we see Sinopak and Sinokam, a herd selling May, loading, Angolan, Nigerian and Ghanaian crude to Taiwan and Indonesia. At the same time, the refining run rates for the state-owned refineries in China have drifted lower. We know that they have been granted access to the SPF. Whilst the Chinese teapots were directed to increase their runs, whilst their domestic prices were kept. So it's a bit strange, right? They're giving the signal for the teapots to run harder, but we reduce margin and allowing the state-owned refineries to reduce crude and get access to the SPF. Perhaps this is kind of related to the optimization of this SPF barrels, but who really knows China as we say is in for the long game for this war. Let me touch on Japan and Korea. They are refining run rates have crept up and at the same time, we also see more gas oil cargo available in the market, sort of depressing the gas oil is west at the same time. It's likely due to the effect of the more US crude and upcrux that was secured early on in the conflict arriving into our time period now. Remember, we are now at day 56, I think it's 3 days and 6 of the conflict. And it takes like at most 50 days to come from the US and we also have more access or these two countries have more access to their SPR barrels to run harder than at the initial part of the crisis. I think what we need to look at the relocation of WTI between Asia and Europe, there's going to be a talk of war. I mean, Europe relies also on WTI. So if Asia is pulling barrels ahead of Europe, there will be some impact to utilization rates. On the US side, we are seeing US rejecting some Latum grids because US have the sour SPR and Venezuela for resue production. And Mexico, we heard also promise some crude to flow to Japan. On the SPR bit, let me just give a little bit of a quick fact. Also, on the DOE report on the 70th of April, it indicates that the sour grids represent 62.7% of the total remaining SBR inventory. So the quality of this SBR is sour and will be subject to further discounts. So the trade here is likely that the US Gulf Coast sour fault like the Mars, the Thunderhors Poseidon, they should weaken further. Interesting. And you know one thing that I'm going completely off topic here if you don't mind and maybe you don't have the answer and that's fine but there was a this debate that I had with a head of trading company where everyone seemed to be very bullish refining margins going forward. I'm talking next three to six months but his argument was that at the end of the day you're losing much more crude than you are in terms of product overall. So he was he was recognizing that in the short term the beginning of the crisis you had many more the supply of crude was ample and the stocks were ample whereas it was not necessarily the case for refined products and obviously Asian refineries had to manage their stocks of crude as they were heavily dependent on AG but as that situation then reshifts and you start buying crude from many different places etc. Then once you have that logistical stabilization in terms of okay I can get other crudes from other areas then his argument was that refining margins should collapse because at the end of the day you're losing more crude than you are refining capacity. Do you think that's an accurate statement or you have a different view? It's going to play out on the different product cracks quite differently. We are going to still see diesel and fuel oil shortfall significant shortfall even though you got the crude to run because it's the wrong quality crude and that margin alone because diesel and fuel is other huge just the biggest amount of years of the refining kit. So I think that will carry the refining margins further. That's my view. Fair enough. No sorry I put you on this spot but it's something that I'd like to think rub my head around that because I got out of the FT and everyone was like refining margins are going to be great and all that and like you know it has a point but yeah I'll need to I haven't really thought about it but it's something to worth exploring. Moving on to this to this to this so obviously Hogo started to move a bit higher after what looked like pretty much of our general risk of mold until Wednesday and we saw that on the ice spreads that really getting a bit weak for a while I would say talking to our district expert James he sees Hogo needing a price up mainly on the back of stock US stocks drawing and we talked about that that they were getting very low seasonally low and normally you would start to build up those stocks but given the shortage globally and the reliance on Houston or Gulf Coast diesel globally is that going to be the case are we going to start building again very unlikely so the argument here is that Hogo as well as US Gulf Coast 10 ppm dips are going to need to defend that lower and lower stock situation. How about East West I think a lot of people are asking me about East West. Yes now obviously East West has come off and it's relatively weak -35 to -40 doesn't seem you know again talking to James it doesn't seem like it's fair value there's a lot of chat about Euro getting so tight in May but incrementally you should also see Asia losing some more runs ahead but it's the sort of war that you were discussing around well both of them are going to meet it but who's going to get it. So it seems like perhaps this is also due to some mini-glut. I know James has been calling for a high risk West for a couple of weeks and it hasn't happened but maybe one of the reasons is this mini-glut. We did see and I know this from also gasoline traders that I spoke to that there was this sort of panic by countries like Australia they really needed the oil and there was perhaps too much buying at some point and you now had the prices and the refining margins that you had in Asia contributed to higher runs in some countries like Japan, Korea. Those guys are now exporting a bit more and you had all these cargo that were rooted towards Europe that then were sent to Asia and Australia. So you now have like a lot of cargo arriving at the same time and that sort of creates a reprieve and people are now taking a pause and we see that now with the East West but the remaining underlying problem remains and you are going to have this sort of fight between East West so Europe and Asia for these barrels so you might end up in a very choppy kind of market where one month is Asia the next month is Europe etc. Yeah I just saw the Australian part quite interesting at first we saw that there was a lot of US curve course diesel cargo moving to Australia but the latest report if you also see five diesel cargo shipping from US West coast into Australia which is about 29% of the total flows from the US. I find it very interesting because pack five diesel stocks is actually at a five year low so I don't know how can this be sustained. I mean that again it's just telling you the discrepancies I mean the job of the trader is to bring the cheapest oil to the most expensive location and to serve customers in that way but the thing is that this is maybe a short term solution but it will only exacerbate the problem going forward in pad five and pad three and in the US. So again you're solving arbitrage solves a very short term issue but it's not it's just a band-aid. If the bigger you know that needs to be solved with high refining margins you know in this environment where you don't have oil of course and at the end of the demand destruction that is the only solution we've talked about this many many times now but yeah it is surprising it is surprising that you see these situations and now wouldn't exclude the possibility that in in a month time you see reverse kind of arches and pad five importing again. I mean obviously Europe regret was very strong however to play the devils advocate Europe is getting a lot more from the US and also done both it something to watch out for. US is not drawing stocks in debt as as you would expect but it's also exporting extremely hard because they have a very high use right now something Europe will have to do as well. As we talked about we're starting to see these demand destruction on the airlines and canceling flights so that maybe is putting a you know a psychological lead to the market and as we discussed this before is the job already done and you know we're looking at seasonal import charts into Europe and deciding how bad it would get but if you take the above into account you could get to the impression that jet at least in the short term might not be that hard to solve in Europe. I don't know if you agree with that. I think the one destruction is the easiest for travel right and if the consumer will feel it and I do the first cut which is optimized flights by canceling flights for us and then the consumer can't pay and then you have naturally even less demand so I think that's the easiest to solve from that. No you're right and it's easier to solve because it's decided by one person and a company if it's economically unviable or if they don't have the oil they just cut it and let's not forget that most airlines hedge their oil and they're on the right side of the hedge so there's also going to be an incentive there to make some money let's just face it you know it's probably going to be the case and you know that obviously is going to be bullish for gasoline because people will still go on holiday in Europe and the US during summer and instead of flying around the world they just you know go next door so let's let's keep an eye on that. Talking about gasoline it's been an interesting phenomenon so the biggest move has been the east west east west we got to levels on the east west for May all the way up to eight dollars a barrel and in April it was much higher than that you know I don't know two three four standard deviations higher than what you would ever see before and now that has collapsed and now we're we're at the highest in the five years you know where it's a negative territory for May but you still at the highest in the last five years now are we seeing the bottom of that we're starting to see that for example on our basis Singapore is now the cheapest source to supply into Pakistan it is also the cheapest you know it has had during this week it's now sort of touch and go with Houston in terms of the cheapest source into west coast Mexico now again this is not a story of all you know you're going to empty the tanks there's going to be so many cargo's going to west coast Mexico or Pakistan but it's a sort of like canary in the coal mine that the the numbers are getting to the point where if the stock levels in Singapore are low you will have that export demand so it's not so much of a east west trade but more of a spread trade here for me in Singapore that you might have a lower east west mainly because as we discussed before the problem is shifting from Asia to Europe and the US global problem and I'll just guess again but globally but that support might come on in terms of spreads as we see that Asia now or Singapore becomes an export hub for for these kind of cargo's how about Europe in Europe I see this very weird kind of phenomenon because the spreads and the cracks you know spreads took a beating over the last two weeks I think it's mostly on the back of the EPA waivers and we'll talk about that when we talk about the US in a second and you're starting to see some very you know you had the rally with the beginning of the war and on a paper basis it was just this tide that lifts all boats and the spreads and the cracks were going up but there was also a physical story cashfish were going up arbes in two age that were open but at some point people were starting to realize well actually is South-Africa and Pakistan are not enough you know Houston was dominating the Atlantic Basin and Europe didn't only didn't have that many outlets and let's not forget that we started with a very high level of stocks particularly on high optic then you get this sort of punch in the face with the EPA announcement all waivers on if if ten you know sort of ethanol blending from 10 to 15 percent sea bulb and arbohm sort of fungible and I'm sure you'll be fine. as a consequence, the cashmifs collapsed in an environment where gas NAFTA went up. So you ended up in a situation where your blending margins for E5 and E10 were positive. So cracks keep going up because obviously we still have a global problem, but the spread sort of collapsed in the last two weeks or two, three weeks. Now we're seeing those spreads picking up again. Why? Because yes, East West is coming off and you still have the East African demand. Again, it's not huge, but what's interesting is that now Europe is now the cheapest source to supply to many of these high volume destinations in the Atlantic. And the most interesting one is Mexico. Now Europe is the cheapest source supply into Tukespan. And that's something to tell. It's a story of Houston. It's like Houston is now becoming too expensive. We talked about the stock levels in the US. So you have on the one side extremely cheap referendum and alkylate and a high obtained. You have positive blend margins for E5 and E10. And it's good margins. $10 a ton margins for on average. But on the other side, you're starting to see now that the Atlantic-based stocks are really coming off and you are now the cheapest source, not just still into some East of Swiss countries, but also in the Atlantic. So are we now, are we going to see another rally on spreads? Maybe. It wouldn't surprise me, I would say. Okay, what's the trick here again? So the question here is the EPA waiver. So just to give a little bit of a summary. No, this was, you know, it's all news to a certain extent. But end of March, EPA announced essentially two waivers. One was that CBOB, RBOB, all of this was basically interchangeable, which means that you're blending much more NAFTA. You know, you have a higher PSI, you can blend less high obtained material with low PSI, and you can blend more NAFTAs. At the same time, it allowed for 15% ethanol with 10 PSI RVP. Basically, that's telling you that and we see that with the cashlifts, reform and alkylate cell and and interior it should have been bullish for NAFTA. But that's, you know, you tell me more about NAFTA later on. But essentially, it's allowing for that. But the reality in the physical market is that pipeline operators are being very cautious about that, you know, they're about the spec change and they're rolling, you know, with they're rolling 20-day waiver. So that's sort of limiting the implementation of it. The EPA was a sort of federal role, but then the implementation of it has to be done by each state. And that's taking a bit longer. It was theoretically until I would say end of April, but they've clearly said that this is something that they're willing to extend as much as necessary until this extreme and unusual crisis come off. So perhaps the story here is that you will, you haven't seen that implementation yet, but you will see it over the summer as the governments align as the pipelines are implementing it. So that can put a cap to any kind of rally, but I mean, I'm a doubtful of it, frankly speaking. You know, you see the stock levels, the cracks are telling you a very different story, you know, our bulk cracks just keep going up. I don't know, but the market as we discussed before and not just gas cleanliness is in a way to see kind of thing where spreads are pretty much as below two weeks ago. A crash keep running, but the spread story is still, you know, cautiously going up every day, but we're still below two weeks ago. Okay, so I'll take the NAFTA story then. On NAFTA side, the East West collapsed as the homeless uncertainty seems to paralyze our eastern bias. It's now at the lowest point since the beginning of the war. A first half June deliveries from Europe via the Cape is closed. Asian players are holding back purchasing decisions amid the ongoing uncertainty. No buyer wants to commit to the last expensive cargo rooted the long way around. So for the first time during, since the war began, North West Europe is now offering better icons than Asian markets for Matt origin NAFTA. Russian volume also points to a decrease in the short term, but because Ukraine has struck the rust, top sea refinery on a black sea for the second time in less than a week. So long story short, we believe that the most likely scenario is a rebound in NAFTA East West. Although a quick fire on the fuel as well. So a bit of refresher Singapore is the largest bunker in the world. It's about 4.5 million tons per month of bunkers in Singapore. Second is Joe Shan at 1.5 million tons per month, Rotterdam 0.6 to 0.8 million tons per month, and Fujera at 0.6 million tons per month. So Singapore's size of the bunkering is more than all the last three combined. That's how big Singapore is. So now we are seeing that there is a medium sour crude loss in the supply chain. And therefore that's just not enough receipt going around. The forward landed days for blend components into Singapore remains firm. The forward blend margins for the 0.5% doesn't look particularly attractive. And with this VLSF premium offer box plus East, the mid-southver barrels moving into the high-southver blending pool. On top of that, we have the heavy sweet crude like dar blend moving into the feedstock pool in China. Cat crackers running at lower intake reducing the amount of LCO and celery into the blend pool. Looking at the VLSFQ3 cracks, currently is at $11 per barrel. We think that this is a buy. On high-southver fioside, Singapore is seeing significantly more Russian fuel imports in March and April, particularly with US Reduction Assanctions on Russian oil cargo for those floated till 19 of April, helping to boost inventories here. But again, the fuel production from reduced middle east crude intake will start to be seen in our inventories very soon. And don't forget, we are going into the summer burn period in the middle east, which typically requires a lot more fuel oil. Fuel oil as well. So we are also bullish the Q318 and 3D CST cracks as well. So as the summary, it's probably the only one that we're less bullish is the one that everyone talked about now is jets. Everything else seems like a bullish story here. And that's why I have to summarize. Refighting margin to me is going to still remain strong. Yeah, oh, it makes sense. I mean, look at my summary here, where everything that we've been talking about is that we're in this, as you said, is this moment of pause, if you want. You know, there's we had like two months of massive swings and all that. But now, historically, all of the cracks and spreads are at extremely highs, you know, five-year highs. They're come off in some cases, but we're still at the high five-year highs. And let's not forget that these last five years, we did have the Russian crisis. So now it's sort of wait and seek and a mode exhaustion that people tired of the Trump tweets. And but if all of these CEOs are obviously much better connected than we are, are all saying, this is not over soon, you know, this, you know, there's only, I would remain bullish rather than bearish right now. That's for sure. Anyway, June, thanks a lot. Good to see you. And I'll see you next week. Thanks for the bid. Thanks everyone for listening in. Thank you very much guys. Bye-bye. [Music]