Crude Oil
Oil futures jumped nearly 3 percent on Wednesday on a decline in U.S. crude inventories and after sources signalled top exporter Saudi Arabia wants to see the crude price closer to $100 a barrel. Brent crude oil futures gained $1.90 to settle at $73.48 /bbl, while U.S. crude futures rose $1.95 to settle at $ 68.47 /bbl.
Oil has been supported by the perception among investors that tensions in the Middle East could lead to supply disruptions, including renewed U.S. sanctions against Iran, as well as falling output in crisis-hit Venezuela.
EIA reported a draw in US crude stocks of 1.1 million barrels, as exports rose to 1.75 mb/d while imports dropped to 7.93 mb/d.
Gasoline stocks built due to a robust increase in demand of 584 kbpd to 9.85 mbpd. The drop in refinery runs to 92.4% did not affect the production of gasoline which actually improved by 85 kbpd. Distillate stocks fell due to an increase in demand of 186 kb/d coupled with a drop in production of 162 kb/d.
Last week we had pointed out that there was a strong disparity between the reported increase in stocks and the calculated increase, the latter being close to 12 million barrels. This difference seems to have been incrporated in this week’s report with the calculations suggesting a draw of 8.25 million barrels.
For detailed charts on crude and product stocks, please visit our US Department of Energy Data page
Naphtha
Asia’s naphtha crack settled at $ 69.78 /MT as fundamentals remained weak with low demand which was further hurt by high crude prices.
The May crack has dropped to -$ 2.00 /bbl
Gasoline
No information was available about the gasoline markets today. However, the market seems to be getting hurt by ample supplies and high crude prices.Light distillate stocks in Fujairah rose by a very nominal 78 kb to 7.39 million barrels.
The May crack is lower at $ 10.00 /bbl
Distillates
Asia’s cash differentials for 10 ppm gasoil climbed on Wednesday, helped by higher deals, while cash premiums for jet fuel slipped. Cash premiums for gasoil with 10 ppm sulphur content rose to 37 cents a barrel to Singapore quotes, up from 27 cents on Tuesday. The gasoil market in Asia has started showing signs of supply tightness due to the seasonal refinery turnarounds in the region. Cash differentials for jet fuel fell to 94 cents a barrel to Singapore quotes on Wednesday, down from 97 cents a barrel on Tuesday.
Middle distillate inventories in Fujairah fell by 736 kb to 2.1 million barrels.
The May gasoil crack is marginally lower at $ 14.40 /bbl with the 10 ppm crack at $ 15.00 /bbl. The regrade is steady at $ 0.90 /bbl.
Fuel Oil
Expectations of tighter supplies over the near-term helped lift the front-month East-West arbitrage spread on Wednesday. The May 380-cst fuel oil discount to Brent crude was also slightly firmer despite the rise in crude prices.
The May 180 cst crack has dropped further to -$ 6.40/ bbl. with the visco spread at $ 1.80 /bbl
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.
Cal 19 gasoil cracks have crossed $ 18.00 /bbl. We would recommend adding one more tranche of hedges at this level.
The Naphtha crack for may is at a very rarely seen low level of -$ 2.00 /bbl. We would recommend this as a hedge for consumers.
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.