Crude Oil
Oil fell by more than 2 percent on Monday, pressured by a rise in Russian production, expectations that Saudi Arabia will cut prices of the crude it sends to Asia and a deepening trade spat between China and the United States. Brent Futures settled $ 1.70 lower at $67.64/bbl. WTI futures lost $ 1.93 to settle at $63.01/bbl.
Saudi Arabia was expected to cut prices for all crude grades it sells to Asia in May to reflect weaker prices for its Middle East benchmark Dubai crude.
Despite the supply cut agreement, Russian output rose in March to 10.97 million bpd from 10.95 million bpd in February, official data showed.
In other news, Bahrain announced that a tight oil and deep natural gas field was discovered off the west coast of the island in the Khaleej Al Bahrain Basin. The reserves in that field are expected to dwarf the current reserves of the country. The details about the size and extraction viability of the field are to be released by the Oil Ministry on Wednesday.
Also, in an escalation of the dispute between the world’s biggest economies, China increased tariffs by up to 25 percent on 128 U.S. products.
Naphtha
Asia’s naphtha crack eased to a two-session low of $89.10 a tonne weighed down by firm Brent crude prices, but spot premiums for the petrochemical feedstock stayed strong on squeezed supplies.
The April crack for Naphtha has improved to – $ 0.15 /bbl.
Gasoline
Asia’s gasoline crack rose to $ 8.28/bbl on Monday. This is its highest level since March 5. This could be due to a drop in crude prices as there are no changes in the massively high supplies available in both Asia and Europe.
The April crack has further dropped to $ 11.30 /bbl .
Distillates
Asia’s cash differentials for gasoil with 10ppm sulphur content firmed on Monday amid steady demand, while the market kept a close watch on the region’s seasonal refinery maintenance that is expected to curb supplies. Cash premium for 10ppm gasoil rose to 50 cents a barrel to Singapore quotes, touching its highest so far this year. The differential, which has been rising steadily over the last one week, was at 46 cents on Thursday. The planned refinery turnarounds in Asia over the second quarter, especially between May-June, would put a lid on supplies and help support the middle distillate prices.
Longer-term consumption growth for diesel will be led by the global emerging markets, with significant momentum coming from markets within Asia, supported by favourable macroeconomic and demographic trends, rising government spending on infrastructure projects and the shift to cleaner-burning marine gasoil in the shipping sector. India and Indonesia will be among the best performing diesel markets in Asia over the next five years, supported by rapid economic growth and a surge in infrastructure spending, particularly on roads and railways.
Meanwhile, cash differentials for jet fuel increased to 52 cents a barrel to Singapore quotes, from 46 cents on Thursday.
The April gasoil crack is marginally lower at $ 15.60 /bbl with the 10 ppm crack at $ 16.30 /bbl. The regrade is up to $ 0.50 /bbl.
Fuel Oil
Asia’s front-month viscosity spread climbed 25 cents from the previous session to reach $9.50 on Monday, the highest in nearly 11 months as demand has soaked up some supplies. High gasoil margins make cutter stock more expensive and lead to the expansion of this spread.
The April 180 cst crack has risen to -$ 6.10/ bbl with the visco spread going wider to $ 1.65 /bbl. The improvement in the 180 crack may be due to the drop in crude prices.
Hedge Recommendations
Hedge recommendations are essentially made for refiners. These are not trading positions as such. The rationale of these positions is to lock in extraordinary levels for the refiner.
The value of the Calendar 19 Gasoil strip has fallen by nearly 30 cents over yesterday making our decision not to hedge yesterday as an opportunity loss. These issues have to be faced by refiners who have to be looking at the MTM on hedges, market momentum and reactions of top management on issues like this.
Today’s status of active recommendations is below.
About this blog
This blog post attempts to give a top level summary of the Singapore market goings on to a person who seeks to obtain a directional sense of the market on a daily basis.