Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices settled lower on Thursday as U.S. industrial-linked factory orders dipped, while the dollar strengthened, making crude more expensive for non-American buyers.

London-traded Brent crude for March delivery settled down 67 cents, or 0.8%, at $82.17, extending the previous session’s slide of 2.7%.

New York-traded WTI crude for March settled down 53 cents, or 0.7%, at $75.88 a barrel on Thursday. That deepened Wednesday’s 2.7% tumble in WTI.

Also weighing on the market were uncertainties over how well demand from China would fare in February, more than a month after the top crude importer abandoned all COVID restrictions.

Helping to keep oil from moving lower was a European Union ban on Russian refined products set to take effect on Feb. 5, potentially dealing a blow to global supply.

On China’s side, crude imports were assessed at 10.98 million bpd, or barrels per day, in January, down from December’s 11.37M bpd and November’s 11.42M bpd, a Reuters report said Thursday.

While new orders for U.S. manufactured goods rose broadly in December, orders for industrial equipment and other machinery fell, according to the latest Commerce Department data. “It was highlighting more slowing in the economy, particularly on the industrial side, which is a negative for petroleum,” said John Kilduff, a partner at Again Capital.

A rebound in the dollar index, which hit a nine-month low earlier in the session on softer U.S. Federal Reserve rate hike bets, also weighed on oil prices, according to Jim Ritterbusch of Ritterbusch and Associates.

“Inflation has eased somewhat but remains elevated,” the U.S. central bank said in a statement that marked an explicit acknowledgement of the progress made in lowering the pace of price increases from the 40-year highs hit last year.

The Federal Reserve raised its target interest rate by a quarter of a percentage point on Wednesday, yet continued to promise “ongoing increases” in borrowing costs as part of its still unresolved battle against inflation. “Inflation has eased somewhat but remains elevated,” the U.S. central bank said in a statement that marked an explicit acknowledgement of the progress made in lowering the pace of price increases from the 40-year highs hit last year.

Asia’s naphtha refining profit margin jumped on Thursday hitting the highest since May 2022 amid spot purchase interest from South Korean buyers.

The crack rose by $19.32 to $85.20 a tonne over Brent crude, while the backwardation in the market widened by $3 to $10.25 per tonne.

South Korean buyers Lotte Chem and YNCC were active in the market for March delivery cargoes, sources said. GS Caltex sought March supplies via a tender.

The February crack is higher at -$3.25 per barrel. The March crack is at -$3.35 per barrel

The gasoline crack, on the other hand, declined by 54 cents to $12.46 a barrel amid rising inventories at key trading hubs.

Gasoline consumption and imports in Indonesia, Asia’s largest importer of the motor fuel, could hit records this year as the nation recovers from COVID-related travel curbs, although growth is expected to slow slightly along with its economy.

Singapore’s light distillate inventories climbed 1.282 million barrels to more than five-month high of 17.156 million barrels in the week to Feb. 1, Enterprise Singapore data showed.

The February crack is higher at $15.40 per barrel. The March crack is at $15.30 per barrel.

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

Asia’s 10-ppm sulphur gasoil margins slipped to the week’s lowest despite thin spot trading liquidity, amid sufficient supply expectations in the region and volatile oil futures.

Cash differentials for 10 ppm gasoil stood at a premium of $2.78 a barrel to Singapore quotes, down from $2.95 in the previous session.

Refining margins for 10 ppm gasoil, however, fell to around $31.00 per barrel.

Cash differentials for jet fell to a premium of $0.52 a barrel to Singapore quotes, down from $ 2.65 a barrel in the previous session.

Refining margins for jet slipped at a slower pace to $27.32 a barrel.

Singapore middle distillates stocks held by up to 14 major oil and oil storage companies, as of Feb. 1, climbed to 9.1 Million barrels, the highest levels since November 2021, according to data released on Thursday by Enterprise Singapore.

The February crack for 10 ppm Gasoil is lower at $29.00 /bbl. The 10 ppm regrade is at $0.50 /bbl.

The March crack for 10 ppm Gasoil is lower at $27.00 /bbl. The 10 ppm regrade is at -$0.50 /bbl.

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

The spot market for high sulphur fuel oil (HSFO) remained under pressure on Thursday as Russian supplies continued to flood the East of Suez region, ahead of the European Union’s Feb. 5 embargo on refined products.

The 180-cst HSFO cash differential fell to a discount of $3.51 a tonne to Singapore quotes, while the 380-cst HSFO cash differential dipped to a premium of 46 cents on Thursday.

Onshore fuel oil stocks rose 6% to a three-week high of 20.71 million barrels (3.26 million tonnes) in the week ended Feb. 1, Enterprise Singapore data showed Thursday.

The February crack for 180 cst FO is lower at – $20.60 /bbl with the visco spread at $1.45 /bbl.

The March crack for 180 cst FO is lower at – $19.60 /bbl with the visco spread at $0.50 /bbl.

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

No fresh trades 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.

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.

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

Leave a Comment