Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices fell more than 2% Wednesday to close down for the day and March as traders moved cautiously ahead of a decision on production quotas by the OPEC+ group. 

Brent crude closed down $1.40, or 2.2%, at $63.53 per barrel.

WTI settled down $1.39, or 2.3%, at $59.16 per barrel.

For the month, WTI and Brent lost almost 4% while for the quarter, they rose about 22%.

Ahead of Thursday’s decision on May production, traders are betting the Saudis will try to clamp down output again by citing Europe’s renewed wave of Covid-19 infections and lockdowns that have made the region one of the world’s most vulnerable toward the virus.

OPEC oil output has risen in Mar’21 to 25.07 MMB/D, up 180 KB/D MoM, as higher supply from Iran countered reductions by other members under a pact with allies, a Reuters survey found.

DOE data

In contrast with the API report, the DOE reported a small draw in crude, a significant draw in gasoline and a significant build in distillate stocks.

The crude stocks have drawn due to both, an increase in run rates to 83.9% and an increase in export to over 3.1 mbpd for the first time in a long time. On the flip side, production seems to have crossed 11 mbpd for the first time in several months as more producers are reacting to the high oil prices.

Gasoline stocks have been impacted both by a healthy increase in demand to 8.9 mbpd, a number not seen in over a year now as well as a drop in imports. However, our material balance statement, below, suggests a build in gasoline stocks.

Distillate stocks, on the other hand, should have been reported as drawn this week. However, anomalies in the reverse direction have been going on for so long that a correction would be overdue.

At a global level, the death toll from the COVID-19 virus rose to 2,827,422 (+12,236 DoD) yesterday. The total number of active cases rose by around 170,000 DoD to 22.23 million. (Click here for details)

Asia’s naphtha crack stabilized on Wednesday, halting declines earlier in the week as concerns over lasting supply disruptions eased following the reopening of the Suez Canal on Tuesday.

The naphtha crack rose to $98.45 a tonne on Wednesday, up from a near two-week low of $96.50 a tonne on Tuesday.

The front-month naphtha arbitrage spread, however, extended losses after falling to a two-week low of $13.75 a tone on Wednesday, down from $14.75 a tonne in the previous session, Refinitiv data in Eikon showed. .

The April crack is higher at $0.85 /bbl

Asia’s gasoline crack extended gains on Wednesday, climbing to a more than one-year high amid refinery outages in Indonesia and Japan and signs of improved demand for the motor fuel in Asia and the United States, trade sources said.

The gasoline crack climbed to $7.12 a barrel on Wednesday, up from $6.88 in the previous session and its highest since Feb. 14, 2020.

Indonesia’s state oil company PT Pertamina said it has put out a fire that had engulfed part of its 125,000 barrel per day refinery in Balongan, West Java and had begun making preparations to restart the plant.

The front-month naphtha arbitrage spread, however, extended losses after falling to a two-week low of $13.75 a tone on Wednesday, down from $14.75 a tonne in the previous session, Refinitiv data in Eikon showed. Compared with the same time last year, Fujairah light distillate inventories were 23% higher.

The April crack is lower at $8.50 /bbl.

Click Here for a graphical depiction of Global Gasoline stocks by region.

Cash differentials for 10 ppm gasoil were dropped a further 2 cents to a discount of 29 cents per barrel to Singapore quotes on Wednesday.

Cash discounts for jet fuel were at 60 cents per barrel to Singapore quotes on Tuesday, the widest since March 11. They were at a 53-cent discount a day earlier.

Indonesia’s state oil company PT Pertamina said it has put out a fire that had engulfed part of its 125,000 barrel per day refinery in Balongan, West Java and had begun making preparations to restart the plant.

Middle-distillate inventories in the Fujairah Oil Industry Zone slipped 3.6% to 3.5 million barrels in the week ended March 29, data via S&P Global Platts showed.

The April crack for 500 ppm Gasoil is higher at $3.75 /bbl with the 10 ppm crack at $ 4.80 / bbl. The regrade is at -$ 1.50 /bbl. 

Click Here for a graphical depiction of Global Distillate stocks by region.

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) crack against Dubai crude rebounded from a near three-month low on Wednesday due to weaker crude oil prices. The February VLSFO crack was at $11.44 a barrel above Dubai crude prices on Wednesday, down from a near three-month low of $11.20 a barrel in the previous session, data from Refinitiv Eikon showed.

The front-month VLSFO crack versus Dubai dropped 22% in March amid improved regional supplies and rising arbitrage inflows.

Fujairah Oil Industry Zone inventories for heavy distillates and residues jumped by 1.121 million barrels, or about 177,000 tonnes, to a four-week high of 8.236 million barrels, or 1.297 million tonnes, data via S&P Global Platts showed. Fujairah’s fuel oil inventories were 43% lower than year-ago levels.

The April crack for 180 cst FO is higher at  -$4.20 /bbl with the visco spread at $0.95 /bbl.

Click Here for a graphical depiction of Fuel Oil stocks by region.

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.

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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.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

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