Crude Oil
Oil prices dipped on increasing US dollar strength and profit taking, but sentiment still remained strongly bullish. Brent crude oil futures eased 10 cents to settle at $74.64 /bbl, while U.S. crude futures shed 9 cents to settle at $ 68.10 /bbl.
For the week, Brent gained 0.5%, its third straight week of gains. WTI however dropped 0.4% which is attributable to the change in front month last week.
Over the weekend, French President Emmanuel Macron and Iranian President Hassan Rouhani spoke by telephone on Sunday and agreed to work together in coming weeks to preserve the 2015 Iran nuclear agreement, the Elysee said in a statement. The US has been adamant that the deal be changed failing which it will reimpose sanctions on Iran.
Baker Hughes reported the number of active rigs in the US rose by 5 to 825.
That was the highest number since March 2015, underscoring worries about rising U.S. output. US domestic oil production – driven by shale extraction – rose to an all-time high of 10.59 million barrels per day (bpd) last week, the Energy Information Administration (EIA) said.
30 April 2018
Losing Energy…………
The Range in the week under review is a 75.46/bbl high, and a 73.14 low. The third week with a positive closing, but barely. A week with a smaller range; what the Japanese Candlestick experts call a shooting star- a sign of rest and indecision. We are now looking at the July’18 Contract after a roll-over on Sunday
Last week, we had recommended exiting longs in the 74-76/bbl range, and a stop below 70, incase you want to continue to hold.
We were looking for signs of exhaustion and we found it last week. Narrow trading ranges to indicate ( to risk an overly simplified reading of the market) reluctant follow-through by new buyers and joyous profit taking by older buyers. Momentum continues to lag this up-swing; another sign of exhaustion.
As mentioned, barring probable retest of the 74-76 range, Brent is likely to head back to the 68-69/bbl range. The Short-term @-week old Demand line breaks on Today’s open. More importantly , this coincides with the Key Long-term Historical Channel Resistance, offering a high probability of a smart reversal.
Trading Strategy
Go short with targets at 68-69/bbl. Stop > 76 for now. Resistance at 73-75/bbl.
Supports and Resistances
Immediate Supports 71.00-72.20/bbl. Immediate Resistance at 73.45 -75.45 /bbl.
About the Analyst
Vignesh Eswar has been a Technical Analyst, Advisor, Trader, and Trainer with over 23 years experience in Indian markets.
Naphtha
Asia’s naphtha crack hit a three-week high of $85.20 /MT on Friday following a surge in demand. The front month time spread increased to $ 14.50 / MT reflected the strength in the market amply. This is the highest backwardation since March 31, 2015.
The May crack is stronger at -$ 0.55 /bbl
Gasoline
Asia’s gasoline crack was at $6.66 /bbl, highest since Tuesday, but supplies were still ample and fundamentals have been weak since the start of the year.
The May gasoline crack has improved to $ 10.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for 10 ppm gasoil inched lower on Friday after hitting the highest for the year earlier in the week, while traders remained optimistic on prospects for firmer demand and tightness in supply continuing over the next few weeks.
Cash differentials for gasoil with 10 ppm sulphur content slipped to 46 cents a barrel to Singapore quotes, from 49 cents on Thursday while premiums for jet fuel gained a cent on Friday to $1.19 a barrel to Singapore quotes.
The impact of seasonal refinery turnarounds on supply would strengthen the robust fundamentals of the industrial fuel, which is aided by the economic growth prospects of the region. At least six of China’s state-owned and private refiners are planning a full annual maintenance shutdown in the second quarter for 30 days or more, including the nation’s largest refiner Sinopec’s Zhenhai unit. .
The May gasoil crack remains unchanged at $ 15.55 /bbl with the 10 ppm crack at $ 16.10 /bbl. The regrade is at $ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst fuel oil market extended gains on Friday amid ongoing signs of near-term supply shortages. The Singapore fuel oil market rallied this week as inventories dropped at the same time that some supplies in the region failed to meet the standards for use as shipping fuel, further reducing the amount of supply available. Cash premiums of the mainstay fuel oil climbed $2.80 a tonne to Singapore quotes, their highest since May 2017 and up from a $1.40 a tonne premium a week ago..
The May 180 cst crack has improved by leaps and bounds to -$ 5.60 / bbl. with the visco spread increasing to $ 1.80 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
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.
Click Here to see how all our recommendations have fared
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.