Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices tumbled for the first time in four days on signs Iran could have an imminent nuclear deal to legitimately bring its crude supplies back to a market that saw US crude hitting 2008 highs and Brent 2012 peaks on Thursday amid the Ukraine war and sanctions on major oil exporter Russia.

Brent crude futures settled down $2.47, or 2.2%, at $110.46 a barrel, also sliding for the first time in four days. Brent’s session peak of $119.78 was the highest since May 2012.

WTI crude futures settled down $2.93, or 2.7%, at $107.67 a barrel. It earlier surged to $116.57, its highest since September 2008, extending a three-day run-up on concerns that the sanctions on Russia could severely impact energy exports from a country that provides 10% of the world’s oil needs.

Oil’s retreat came after headlines suggesting brisk progress in talks between Iran and global powers to reactivate Tehran’s 2015 nuclear deal that could free the Islamic Republic itself from US sanctions on its oil. Iranian media quoted Mikhail Ulyanov, Russia’s chief negotiator at the nuclear talks, as saying an agreement was likely over the next few days, paving way for the legitimate return of Tehran’s oil to the market.

 

At a global level, the death toll from the COVID-19 virus rose to 6.00 Million (+7,625 DoD) yesterday. The total number of active cases fell by 220,000 DoD to 61.10 million. (Click here for details).

 Asia’s naphtha refining traded steady at $257.23 a tonne on Thursday after hitting record levels in the last session, as fears of supply disruption from Russia spooked traders.

Naphtha margins have soared over 51% after Russia invaded Ukraine. Fears of disturbances on the Black Sea route pushed markets to apply risk premium to the light fuel, driving prices to their strongest level since 2008.

The March crack is tanked $3.70 per barrel. The April crack is at $ 7.65 per barrel 

Asia’s gasoline crack tanked by $2.92 to $8.24 a barrel.

Singapore inventories of light distillates declined 688,000 barrels to more than one month low of 13.756 million barrels in the week to March 2, Enterprise Singapore data showed.

The March crack has risen to 13.95 /bbl. The April crack has risen to $18.45 per barrel.

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

Asian refining margins for 10 ppm gasoil soared to their highest level on record on Thursday, despite steeper feedstock crude prices, while cash premiums for the fuel grade surged to a fresh multi-year high.

Cash differentials for gasoil with 10 ppm sulphur content rose to $4.45 a barrel to Singapore quotes, a level not seen since Singapore’s benchmark gasoil grade was shifted to 10ppm in January 2018, from 500ppm earlier. They were at a premium of $2.89 per barrel on Wednesday.

Refining margins  for 10 ppm gasoil jumped to $23.09 a barrel over Dubai crude during Asian trading hours, up from $21.63 a day earlier.

Cash premiums for jet fuel also jumped by 68 cents to $2.29 a barrel to Singapore quotes on Thursday.

Singapore’s middle distillate inventories climbed 7.7% to a four-week high of 7.9 million barrels in the week to March 2, according to Enterprise Singapore data. But this week’s stocks were 45.5% lower than a year earlier.  

The March crack for 500 ppm Gasoil is higher at $21.55 /bbl with the 10 ppm crack at $22.55 /bbl. The regrade is at -$7.90 /bbl.

The April crack for 500 ppm Gasoil is at $23.00 /bbl with the 10 ppm crack at $24.00 /bbl. The regrade is at -$6.00 /bbl.

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

Asia’s front-month crack for 0.5% very low-sulphur fuel oil (VLSFO) surged for a second consecutive session on Thursday to hit a fresh high in more than two years.

The front-month VLSFO crack jumped to $29.39 per barrel against Dubai crude during Asian trading hours, the highest since January 2020. The crack was at $24.67 per barrel a day earlier.

Cash premiums for Asia’s 0.5% VLSFO were at a premium of $17.12 a tonne to Singapore quotes on Friday, compared with $19.91 per tonne a day earlier.

Cash premiums for 380-cst high sulphur fuel oil (HSFO) rose to $3.25 per tonne to Singapore quotes on Thursday, riding on two firmer deals in the physical trade window. They were at a premium of $1.30 per tonne in the previous session.

Singapore’s onshore fuel oil stocks inched up 1.7% to 21.7 million barrels, or 3.2 million tonnes, in the week to March 2, according to the Enterprise Singapore data.

The March crack for 180 cst FO has rebounded to -$12.35 /bbl with the visco spread at $2.05 /bbl.

The April crack for 180 cst FO is at -$6.25 /bbl with the visco spread at $1.95 /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.

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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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