Crude Oil
Crude prices rose for the ninth day in a row on Wednesday as the U.S. government reported another weekly drop in stockpiles that bucked market expectations. This is its longest winning streak in over two years.
Brent settled up 38 cents, or 0.6%, to $61.44 a barrel. WTI crude for March was at $58.68 a barrel, up 32 cents or 0.6%.
Iran has carried out its plan to produce uranium metal, the UN atomic watchdog confirmed on Wednesday, despite Western powers having warned Iran that it would breach their 2015 nuclear deal as uranium metal can be used to make the core of an atom bomb.
DOE data
The DOE, like the API reported a surprise draw in crude stocks yesterday as imports once again dropped by 650 kbpd. Gasoline stocks continued to build as demand has yet failed to lift up above 8 mbpd. Distillate stocks drew thanks to a cold wave increasing heating demand.
The material balance statement continues to show glaring anomalies, particularly in crude stocks. In the previous week, it had suggested a huge crude build which was reported as a small draw. This week too, the material balance shows a small build instead of the huge draw that has been reported. At some point in time this anomaly will correct itself.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 2,363,459 (+14,018 DoD) yesterday. The total number of active cases fell by around 120,000 DoD to 25.48 million. (Click here for details)
Naphtha
Asia’s naphtha crack inched lower on Tuesday, but still lingered close to its strongest levels in three weeks, thanks to tighter supplies and firmer demand for petrochemicals.
The naphtha crack NAF-SIN-CRK dipped to $107.15 per tonne from $108.88 per tonne on Monday. It has surged about 77% in the last two months.
Naphtha flows into Asia this month were provisionally estimated around 5.6 million tonnes, down from January’s flows of 6.2-6.3 million tonnes, Refinitiv oil research assessments showed.
The February crack is lower at $0.40 /bbl.
The March crack is at $0.05/bbl
Gasoline
Asia’s gasoline crack slipped for a third consecutive session on Wednesday, partly weighed by the recent strength in feedstock crude prices, but traders expect transportation fuel demand to strengthen gradually as countries ease mobility restrictions in coming months.
The gasoline crack dropped to $3.26 per barrel on Wednesday, the lowest since Dec. 30. They were at $4.12 per barrel a day earlier
India’s gasoline consumption in January rose about 6.1% from a year earlier to 2.6 million tonnes, official data showed on Tuesday.
Light-distillate inventories in the Fujairah Oil Industry Zone slipped 4.6% to 6.99 million barrels in the week ended Feb. 8, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 7.2 million barrels so far this year, and this week’s inventories were about 12% lower compared with the same period a year earlier.
The February crack is lower at $4.15 /bbl.
The March crack is at $4.75 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Gasoil with 10 ppm sulphur content flipped to a premium of 5 cents a barrel to Singapore quotes, compared with a discount of 4 cents per barrel a day earlier.
India’s diesel consumption, which accounts for about 40% of overall refined fuel sales in the country, dipped to 6.8 million tonnes in January, compared with 7.2 million tonnes in December, official data showed on Tuesday.
Asia’s cash differentials for jet fuel firmed on Wednesday to their strongest level in more than two months, while prompt-month spread for the aviation fuel narrowed its contango for a second straight session.
Cash discounts for jet fuel narrowed to 5 cents per barrel to Singapore quotes, the smallest discounts since Dec. 8. They were at a discount of 12 cents per barrel on Tuesday.
The Feb/March time spread for the aviation fuel in Singapore narrowed its contango to trade at a discount of 22 cents per barrel on Wednesday.
Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 14.8% to 4.4 million barrels in the week ended Feb. 8, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 4.5 million barrels so far this year, compared with a weekly average of 4.2 million barrels in 2020, Reuters calculations showed.
The February crack for 500 ppm Gasoil is higher at $6.20 /bbl with the 10 ppm crack at $ 7.30 / bbl. The regrade is at -$ 2.00 /bbl.
The March crack for 500 ppm Gasoil at $6.30 /bbl with the 10 ppm crack at $ 7.40 / bbl. The regrade is at -$ 1.80 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month 0.5% very low-sulphur fuel oil (VLSFO) refining margin slipped on Wednesday, halting four sessions of steep gains as crude oil prices continued to rally.
The front-month VLSFO crack versus Dubai slipped to $14.70 a barrel, down from a one-year high of $15 a barrel marked on Tuesday, but was still well above $12.93 a barrel at the start of the month, according to Refinitiv data.
Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 994,000 barrels, or about 157,000 tonnes, to 9.786 million barrels, or 1.541 million tonnes, data via S&P Global Platts showed. Inventories were 18% lower than a year ago.
The February crack for 180 cst FO is lower at -$3.05 /bbl with the visco spread at $1.10 /bbl.
The March crack for 180 cst FO is at -$2.75 /bbl with the visco spread at $1.30 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action today
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 refinery.
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.