Oil Prices held firm yesterday notwithstanding a bearish inventory report from the DOE. Brent futures gained 23 cents to settle at $73.36 /bbl while U.S. crude futures gained 68 cents to settle at $ 67.93 /bbl.
While the DOE reported a huge build in crude stocks, the markets discounted the build as most of it was in the West Coast which is relatively distant from the US pipeline network.
The markets were also a bit concerned by a report from the IMF which said it had censured Venezuela for failure to provide timely economic data and gave it 6 months to rectify the situation. The fear was that such failure to comply could lead to further sanctions.
The US DOE reported a massive build of 6.2 million barrels in crude stocks in its weekly report yesterday. Gasoline stocks also built, but distillate stocks continued to fall.
As mentioned earlier, most of this build (around 4.9 million barrels) was on the West Coast of the US. US crude production increase to 10.62 mb/d. While imports were marginally higher, exports dropped by close to 200 kb from the record 2.33 mb /d seen last week.
Refinery runs increased marginally to 91.1 % utilization. However, distillate stock production increased far less than gasoline production.
The draw in distillate stocks can be attributed to the massive surge in demand of 786 kb/d though it was mitigated a bit by the drop in exports as can be seen in the material balance statement below.
For detailed charts on crude and product stocks, please visit our US Department of Energy Data page
Asia’s naphtha crack eased a little to $87.70 /MT. Buyers have yet to emerge for purchase of cargoes for second half June delivery.
The crack for balance May has fallen to -$ 0.90 / bbl.
Asia’s gasoline crack eased marginally to $7.17 a barrel. Markets will be keenly following stock data expected over the next couple of days. Stocks in Fujairah fell by 882 KB to 7.34 million barrels.
The May crack has eased to $ 10.30 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash premiums for jet fuel edged higher on Wednesday as traders remained hopeful on stronger summer travelling demand for the aviation fuel.Cash premiums for jet fuel climbed to $1.12 a barrel to Singapore quotes, compared with $1.09 on Monday.
Meanwhile, cash differentials for gasoil with 10 ppm sulphur content rose to 41 cents a barrel to Singapore quotes, from 39 cents on Monday. Overall demand for gasoil in Asia is quite healthy and inventory levels are also weak.
The situation is likely to change after the refinery maintenance season gets over in another couple of months. Chinese exports will be a key factor for the middle distillate markets in the second half of the year.
Middle distillates inventories in the Fujairah Oil Industry Zone (FOIZ) climbed about 16 percent from a week earlier to 2 million barrels in the week ended April 30,
The balance May crack has risen to $ 15.30 / bbl with the 10 ppm crack quoting at $ 15.85/bbl. The regrade is valued at $ 0.65 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Bullish sentiment fuelled by expectations of tight near-term supplies and rising seasonal demand helped boost the prompt-month 380-cst time spread and fuel oil crack on Wednesday.
This came amid ongoing refinery maintenance in Russia as well as upcoming refinery maintenance in Iran which limit fuel oil output as well as fewer exports to Asia from the Middle East to Asia amid rising seasonal demand for power generation.
The 380-cst May/June time spread was trading at about $3.25 a tonne on Wednesday, up from about $2.80 a tonne on Monday.
In the physical market, 380-cst fuel oil cash premiums climbed for a third straight session to a one-year high of $3.10 a tonne to Singapore quotes, boosted by limited supplier offers and firm demand for spot cargoes of the mainstay fuel.
Stocks in Fujairah increased marginally by 83 KB to 9.61 million barrels.
The May 180 cst crack has once again jumped up to -$4.70 / bbl. The visco spread continues to increase and is now at $ 2.00/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The Cal -19 strips for Jet and Gasoil have once again blown out with Jet at $19.45 /bbl and 500 ppm gasoil at $ 18.55 /bbl. While we are checking the market, we would recommend staying hedged and adding if the market rises beyond this.
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 refiner.
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.