Crude Oil
Oil prices edged down on Wednesday after U.S. government data showed a surprise build in crude inventories, but futures held near their highest in almost five months as OPEC-led output cuts and sanctions on Iran tightened the supply outlook. Brent futures settled at $69.31 a barrel, losing 6 cents. WTI futures settled at $62.46 a barrel, falling 12 cents .
Despite the sharp increase in U.S. crude inventories, market participants said prices were positioned to move up on tightening global supply and signs of demand picking up. The Brent session high was $69.96, the strongest since Nov. 12, when they last traded above $70.
On the bearish side, Venezuela’s state-run energy company, PDVSA, kept oil exports near 1 million barrels per day in March despite U.S. sanctions and power outages that crippled its main export terminal, according to PDVSA documents and Refinitiv Eikon data.
Crude stocks rose primarily on an increase in production to a new record level of 12.2 mbpd combined with an increase in net imports by 392 kbpd. The increase in production is expected to be the single largest factor weighing on crude prices and keeping them depressed. However, our material balance statement seems to suggest that the crude build may well have been overstated.
The material balance statement also suggests that product stocks may have been almost at the same level at as last week rather than the significant draws they are showing.
Naphtha
Asia’s naphtha crack extended losses on Wednesday to reach a 3-1/2 week low of $48.38 a tonne, dragged down by muted demand and strong Brent crude prices.
Traders expect naphtha cargoes arriving in May from the West including Europe and the Mediterranean to be lower versus this month. But this has failed to lift the market. A fire at a refinery in Kuwait, a key naphtha exporter to Asia, has so far not impacted any naphtha shipments. A fire had occurred at a kerosene unit in the refinery of Mina Abdulla, Kuwait state news agency KUNA said.
The April crack is lower at -$ 6.20 /bbl
Gasoline
No fresh news on the gasoline markets. Light Distillate stocks in Fujairah fell be 353 KB to 11.24 million barrels.
The April crack is higher at $ 7.30 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil were at a discount of 25 cents a barrel to Singapore quotes, the widest since March 6. They were at a discount of 24 cents a barrel on Tuesday.
The ongoing seasonal refinery turnarounds have not tightened the market as previously expected.
Cash discounts for jet fuel were at 20 cents a barrel to Singapore quotes, against a discount of 18 cents on Tuesday.
Middle distillate stocks in Fujairah dropped by 116 KB to 2.05 million barrels.
The April crack for 500 ppm Gasoil is higher at $ 11.70 /bbl with the 10 ppm crack at 12.65 / bbl. The regrade is steady at +$ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst fuel oil crack against Brent crude held firm despite firmer crude oil prices on Wednesday. However, trade liquidity in the 380-cst fuel oil crack was limited.
The May and July Singapore 380-cst fuel oil cracks against Brent crude were at about minus $2.05 and minus $2.55 per barrel on Wednesday, respectively.
Meanwhile, 380-cst cash differentials halted four straight sessions of decline on Wednesday as cash discounts narrowed by 10 cents per tonne from the previous session to minus $1.07 per tonne to Singapore quotes.
Fuel oil stocks in Fujairah dropped by 306 kb to 9.99 million barrels.
The April 180 cst crack is higher at – $ 0.95 / bbl with the visco spread at $ 1.05 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to consider 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 refiner.
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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.