Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Resuming the blog after a long time. With luck, we will be regular.

Crude prices fell at Tuesday’s close as Federal Reserve Governor Lael Brainard short-circuited oil bulls’ attempts to rally the market for a second day in a row with her speech about how the central bank intended to bring inflation back to its target with strong rate tightening if necessary.

Brent crude futures settled down 89 cents, or 0.8%, at $106.64 per barrel. It had risen 4% earlier in the day to reach almost $110 as oil bulls attempted to add to Monday’s 2% gain. For context, Brent fell 13% last week for its biggest weekly decline since April 2020 after finishing the first quarter up 39%, demonstrating the recent volatility in oil.

WTI crude futures settled down $1.32, or 1.3%, at $101.96, after an intraday peak of $105.59. WTI settled below the key $100 support last week as it fell about 13%, just like Brent, for its worst week since April 2020. That came despite a 33% rally in the first quarter.

Tuesday’s reversal in crude came after Brainard, who is awaiting confirmation as Fed Vice Chair, vowed to bring inflation, which grew 6.4% in the 12 months to February, according to the central bank’s closely-watched Personal Consumption Expenditure Index, to the ”neutral” target of 2% later this year.

Oil futures slid on Wednesday, extending losses from the previous day, as a stronger U.S. dollar prompted fresh selling while data showing a build in U.S. crude stocks and Shanghai’s extended lockdown fuelled fears of slower demand.

api data

The API reported an unexpected build in crude stocks. We shall await the official DOE data later today.


At a global level, the death toll from the COVID-19 virus rose to 6.18 Million (+3,482 DoD) yesterday. The total number of active cases fell by 306,000 DoD to 58.22 million. (Click here for details).

Asia’s naphtha refining profit margin tumbled to its lowest since June 2021 on Tuesday on concerns of slowing demand from petrochemical units. A rally in crude oil prices also brought the margin lower.

The crack slipped to $106.83 a tonne, down $7.57 from the last close. The inter-month spread widened by $1.50 in backwardation structure to $6.50 a tonne.

Most ethylene crackers in the region continue to operate at reduced rates of around 80%-90% in April amid fresh COVID-19 restrictions in China, Krystal Chung, analyst at Refinitiv Oil Research wrote in a note. “That has hampered downstream derivative demand and logistics.”

The May crack is lower at $ 0.30 per barrel 

Asia’s gasoline crack eased on Monday snapping a three-day winning streak after crude oil prices rose, although downside remained limited as stringent COVID-19 mobility restrictions in China dampened demand.

The refining profit margin for gasoline slipped to $13.69 a barrel, down 64 cents from Friday.

China’s transport ministry expects a 20% drop in road traffic during the three-day Qingming holiday due to a flare-up of COVID-19 cases in the country.

On the supply side, net gasoline exports from Asia’s top suppliers for March narrowed to 3.1-3.2 million metric tonnes (mt), down from February’s revised net total of 4.1-4.2 million mt, Refinitiv Oil Research data showed. However, exports from India, a key exporter, increased to 1.4-1.5 million mt from February’s assessment of 1-1.1 million mt despite strong domestic demand.

The May crack is higher at $18.00 per barrel.

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

Cash premiums for gasoil with 10 ppm sulphur content jumped to $7.91 a barrel to Singapore quotes, an all-time high according to Reuters data that goes back to late 2011. The differentials were at a premium of $7.42 a barrel at the end of last week.

Asian refining margins for 10 ppm gasoil climbed on Monday, while cash premiums for the industrial fuel grade surged to a record high on firmer cargo demand in the physical market amid scarce supplies.

The April/May time spread for 10 ppm gasoil widened its backwardation on Monday to trade at $9.85 per barrel, as against $9.30 per barrel on Friday.

Refining margins, also known as cracks, for 10 ppm gasoil rose to $30.85 a barrel over Dubai crude during Asian trading hours, compared with $26.43 a barrel on Friday.

Asia’s cash premiums for jet fuel slipped to their lowest in more than two weeks on Tuesday, hurt by muted buying interest for physical cargoes, while traders remain concerned that weakness in Chinese domestic demand would weigh on the region’s aviation sector.

Cash differentials for jet fuel slipped to a premium of $4.11 a barrel to Singapore quotes, the lowest since March 17. They were at a premium of $7.18 per barrel on Monday, and have plunged nearly 47% in the last week.

Refining margins, or cracks, for jet fuel weakened to $25.51 per barrel over Dubai crude during Asian trading hours, compared with $27.45 per barrel on Monday.

Global airline capacity inched up 0.6% this week to 83.9 million seats, still 23.3% lesser compared with the corresponding week in pre-pandemic 2019, according to aviation data firm OAG.

Total scheduled airline capacity in North East Asia in the week to Monday dropped 6.7% from the previous week as Chinese airlines trimmed capacity amid ongoing travel curbs, while scheduled seats in South Asia dipped 0.7%, OAG data showed.

“China continues to respond to the latest COVID-19 outbreak with travel restrictions which have seen sizeable reductions in domestic capacity, especially to and from the Shanghai region,” OAG said in a statement.

Jet fuel prices are soaring on the U.S. East Coast, home to some of the world’s busiest airports, with buyers anticipating a worsening shortage as supply dwindles amid sanctions on Russian energy exports.

The East Coast largely relies on shipments on the Texas-to-New Jersey Colonial Pipeline for refined products, as well as imports from Europe. However, Europe is dealing with its own supply strains, so distillate exports to the U.S. East Coast – also known as PADD 1 – are down nearly 60% on a year-on-year basis.

The May crack for 500 ppm Gasoil is lower at $29.00 /bbl with the 10 ppm crack at $30.00 /bbl. The regrade is at -$2.90 /bbl.

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

Asia’s cash premiums for 0.5% very low-sulphur fuel oil (VLSFO) slipped on Tuesday, plunging to their lowest in a month, weighed down by weaker buying interests in the physical trading window and demand concerns stemming from China’s renewed lockdown measures.

Cash differentials for Asia’s 0.5% VLSFO fell to a premium of $17.84 a tonne to Singapore quotes, a level not seen since March 4. They were at a premium of $18 per tonne a day earlier.

The VLSFO crack for May slipped to $21.65 per barrel against Dubai crude during Asian trade on Tuesday, compared with $22.39 per barrel on Monday. The VLSFO refining margins have shed nearly 32% since hitting a record high of $31.79 a barrel in early March.

The 380-cst HSFO barge crack for May traded at a discount of $11.45 a barrel to Brent on Tuesday, compared with minus $10.50 a barrel on Monday.

Cash premiums for 380-cst high sulphur fuel oil (HSFO) were at $21.45 per tonne to Singapore quotes, lingering close to an all-time high touched last week. They were at $21.19 per tonne a day earlier.

The May crack for 180 cst FO is higher at $2.20 /bbl with the visco spread at $4.85 /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

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