Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices settled up slightly on Wednesday as signs of ample supply, including growing U.S. crude inventories, offset growing hopes for higher demand after a jump in manufacturing in top crude importer China.

London-traded Brent crude for April delivery settled at $84.31, up 86 cents or 1.03%. Brent gained 1.8% in Tuesday’s trade.

New York-traded WTI for April delivery settled at $77.69 a barrel, up 64 cents, or 0.8%. In the prior session, WTI rose 1.8% similar to Brent.

Wednesday’s gains came as exports hit a record high over 5.63 million barrels per day, underpinning a global demand for crude. It was the smallest weekly increase in U.S. crude stockpiles over the past four weeks, although it came on top of about 60M barrels already gained since the start of the year.

Another factor helping sentiment in oil was China’s factory data, which came in higher than expected for January, serving as a proxy for energy demand in the world’s largest crude importer.

Offsetting that was German inflation data, which raised worries that the European Central Bank will have to be more aggressive with its tightening cycle. The U.S. manufacturing data showed a slowing economy where some parts were encouraging.

DOE data

US Crude inventories rose notwithstanding the record high export data. This could be because of seasonal maintenance and other disruptions at refineries that led to less-than-normal processing of crude. Refining runs were at around 86% of total capacity. This is much lower than run rates at this time of the year which are around 90%.

Asia’s refining profit margin for naphtha declined by $14.63 to $108.38 a tonne on Wednesday, and the backwardation narrowed to $15.50 per tonne from $19.50 a day earlier.

The March crack is lower at -$2.10 per barrel

Asia’s gasoline refining profit margin rose on Wednesday as bullish factory data from China renewed optimism around fuel demand in the key oil importer. The crack rose to $12.21 a barrel, compared with $11.99 a day earlier.

Light distillate stocks at the Fujairah trading hub declined by 958,000 barrels to a two-week low of 7.275 million barrels in the week to Feb. 27, S&P Global Commodity Insights data showed.

India gasoline sales rose by 13.5% in February from the previous month, preliminary sales data showed.

The March crack is lower at $13.60 per barrel.

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

Asia’s 10 ppm sulphur gasoil margins were broadly steady day-on-day at $25.57 a barrel as muted market activity continued for a third consecutive day on Wednesday, against a backdrop of unchanged fundamentals.

A portion of the market was away for a conference until the end of the week.

Cash differentials for 10 ppm sulphur gasoil fell fell further to $1.13 per barrel on competitively-priced offers for March parcels.

Asian supplies for April could be steady from March, excluding China, with sales tenders expected in the next two days as a handful of refineries are still in the midst of confirming their production plans.

Jet fuel refining margins were almost unchanged day on day at $23.87 per barrel.

The March crack for 10 ppm Gasoil is higher at $26.50 /bbl. The 10 ppm regrade is at -$2.10 /bbl.

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

Asia’s high sulphur fuel oil (HSFO) market firmed on Wednesday as strong bids emerged on the first day of a new trading month, while the very low sulphur fuel oil (VLSFO) market continued to retain downward pressure amid soft demand.

The spot 180-cst cash differential edged higher at $3.11 a tonne over Singapore quotes, with two trades emerging.

The 0.5% VLSFO cash differential dipped to $4.95 a tonne on Wednesday, with bunker fuel premiums set for a bumpy recovery in March in Singapore as refuelling demand from the shipping sector softened sharply in recent weeks, trade sources said.

Residual fuel oil stocks at Fujairah climbed 7% to 13.20 million barrels (2.08 million tonnes) in the week ended Feb. 27, extending gains from the previous week’s surge, showed Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.

Commodities pricing agency S&P Global Platts will be excluding Russian-origin material from its assessments of fuel oil cargoes and bunker fuel in Asia and the Middle East from March 1, the company said in a note to subscribers on Wednesday. “The majority of feedback that Platts received suggested that Russian-origin material was no longer merchantable in the open-origin Asian fuel oil and bunker markets and supported its exclusion from the relevant Platts assessments,” the company said.

Russian fuel oil barrels continued to flood the trading and blending hub of Fujairah, trade sources said.

The March crack for 180 cst FO is higher at – $11.65 /bbl with the visco spread at $3.65 /bbl.

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

No fresh trade for 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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