Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices rose on Thursday, boosted by signs of a strong economic rebound in top crude importer China and easing worries of aggressive U.S. rate hikes.

London-traded Brent crude for April delivery settled at $84.75, up 44 cents or 0.5%. The global crude benchmark has accumulated 2.7% since its last negative close on Monday.

Manufacturing activity in China grew last month at the fastest pace in more than a decade, data showed on Wednesday, adding to evidence of a rebound in the world’s second-largest economy after removal of strict COVID-19 curbs.

Also helping prices were comments by Atlanta Federal Reserve President Raphael Bostic, who said the Fed should stick with “steady” quarter-point rate increases for now in an effort to avoid an economic downturn.

Acting as a dampener was new data out of the eurozone suggested that inflation is taking a while to come down significantly, raising prospects of further rate hikes in the region in the coming months. Headline inflation across the 20-member bloc came in at 8.5% in February, according to preliminary data released Thursday. This indicates that prices are not coming down at the pace that had been registered in recent months. Headline inflation stood as high as 10.6% in October, but reached a revised 8.6% in January..

Oil was also pressured by a strengthening dollar, after U.S. unemployment claims pointed to a strong jobs market. With other data showing growing labor costs, investors expect the Federal Reserve will keep interest rates higher for longer.

Asia’s naphtha and gasoline margins declined on Thursday after stocks at Singapore’s trading hub showed a large buildup, although sentiment remained positive amid tight supplies for both the products.

Asia’s refining profit margin for naphtha crack slipped to $105.10 a tonne.

The March crack is lower at -$3.40 per barrel.
The April crack is lower at -$3.50 per barrel

Asia’s gasoline crack dropped to $10.56 a barrel over Brent crude.

Refiners’ profit from making gasoline has tripled in Asia this year from October lows amid tight supplies from China and hopes of record Indonesian demand, a trend that is likely to continue into summer driving season, traders and analysts said.

Singapore’s onshore inventories of lights distillates climbed 1.567 million barrels to a two-week high of 17.145 million barrels in the week to March 1, Enterprise Singapore data showed.

The March crack is lower at $13.25 per barrel.
The April crack is lower at $13.70 per barrel.

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

Asia’s 10-ppm sulphur gasoil margins were broadly steady at $25.59 per barrel as mixed trading sentiment continued, with some refiners starting their April discussions.

The Asia-Europe arbitrage spread on paper, known as the Gasoil EFS, widened day on day to a discount of $67.12 as a result.

Cash differentials for 10 ppm sulphur gasoil fell to a new low since August 2022 to $0.79 a barrel.

Jet fuel refining margins fell slightly to $23.57 per barrel.

Inventories of middle distillates at key trading hub Singapore fell by around 1 million barrels week-on-week despite a decline in net exports, official data from Enterprise Singapore showed on Thursday.

The March crack for 10 ppm Gasoil is lower at $25.70 /bbl. The 10 ppm regrade is at -$2.45 /bbl.
The April crack for 10 ppm Gasoil is lower at $25.75 /bbl. The 10 ppm regrade is at -$2.05 /bbl.


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

Asia’s high sulphur fuel oil (HSFO) market extended further gains on Thursday amid a flurry of bidding activity, while the very low sulphur fuel oil (VLSFO) market trended weaker in contrast due to low spot demand.

The spot 180-cst cash differential rose to $7.48 a tonne over Singapore quotes, striking five-month highs after bids and trades firmed from the previous day, while 380-cst HSFO also firmed, with its cash differential climbing to $7.50 a tonne.

VLSFO retained downward pressure as demand held soft in downstream sectors, while weekly landed inventories fell as sellers tried to clear stocks with aggressive offers.

Onshore fuel oil stocks fell 9% to a five-week low of 20.60 million barrels (3.24 million tonnes) in the week ended March 1, Enterprise Singapore data showed.

The March crack for 180 cst FO is higher at – $10.40 /bbl with the visco spread at $3.90 /bbl.
The April crack for 180 cst FO is higher at – $10.10 /bbl with the visco spread at $3.90 /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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