Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices fell to over three-week lows on Friday in a volatile session, after strong U.S. jobs data raised concerns about higher interest rates and as investors sought more clarity on the imminent EU embargo on Russian refined products.

London-traded Brent crude for March delivery settled down $2.23, or 2.7%, at $79.94 a barrel, after a three-week low at $79.89.  For the week, the global crude benchmark was down about 7.5%, after last week’s near 3% loss. For February thus far, Brent has lost 5.4%, extending its compounded 6.5% slide for January and December.

New York-traded WTI crude for March settled down $2.49, or 3.2%, at $73.39 a barrel as the dollar’s resurgence on the jobs report put paid to crude’s initial advance on the data. For the week, the U.S. crude benchmark was down by just over 7.5%, opening a fresh gash on oil market sentiment for February, after the drop of nearly 3% in the final week of January. Month-to-date, WTI was down about 7%, extending its near 9% slide over three previous months.

Good U.S. jobs data used to translate almost instantly to higher oil prices. Not anymore. Some 517,000 jobs were added last month, the Labor Department’s NFP, or nonfarm payrolls, report said. That was almost three times above the forecast growth of 188,000 and against December’s revised NFP number of 260,000. The outperformance threw a fresh challenge to the Federal Reserve, which had been hoping its aggressive rate hikes over the past year would have sufficiently cooled the labor market and wages to get inflation back to its target.

On China’s side, crude imports were assessed at 10.98M bpd, or barrels per day, in January, down from December’s 11.37M bpd and November’s 11.42M bpd, a Reuters report said Thursday. ANZ analysts noted a sharp jump in traffic in China’s 15 largest cities after the Lunar New Year holiday but said that Chinese traders had been “relatively absent.”.

China’s independent refineries are ramping up imports of discounted fuel oil blended from Russian barrels to use as low-cost feedstock amid a shortage of government crude oil import quotas for some of them, according to trade sources and data.

China’s services activity in January expanded for the first time in five months as spending and travel got a boost from the lifting of stringent COVID-19 curbs, sending business confidence to near 12-year highs, a private sector survey showed on Friday.

In U.S. supply, energy firms this week cut the number of oil and natural gas rigs by the most since June 2020, energy services firm Baker Hughes Co said. U.S. oil rigs fell 10 to 599 this week, their lowest since September, while gas rigs dropped by two to 158.

The U.S. Commodity Futures Trading Commission said on Thursday that as a result of the ransomware attack on ION Trading UK, the CFTC’s weekly Commitments of Traders report will be delayed until all trades can be reported. CFTC reports provide a snapshot of investor positioning on various assets, including oil.

Asia’s naphtha crack lingered near eight-month highs on Friday and posted a weekly gain of about 63%, mirroring the strength in Northwest Europe margins, traders said, while sentiment remained jittery as EU ban on Russian oil products loomed.

The crack climbed $9.55 to $94.55 a tonne, the highest since May 2022, and the backwardation in naphtha markets widened by $1 to $10.25 per tonne.

Naphtha stocks at ARA dropped to 243,000 tonnes in the week to Feb. 2, the lowest since nearly two months, as markets head into the much anticipated sanctions on Russian refined products Feb. 5 onwards.

The March crack is higher at -$2.45 per barrel

Asia’s gasoline crack declined by 21 cents to $12.25 a barrel amid rising inventories at key trading hubs.

Gasoline stocks at ARA dropped by 8 kt to 1,405 million tonnes.

The March crack is at $13.80 per barrel.

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

Asia’s 10-ppm sulphur gasoil margins posted week on week losses of around 21% on the back of weaker crude oil futures and sufficient supply expectations, despite thin liquidity in the physical and swaps markets.

Cash differentials for 10 ppm gasoil stood at a premium of $2.34 a barrel to Singapore quotes, down from $2.78 in the previous session.

Refining margins for 10 ppm gasoil were valued at $28.38 a barrel at the close on Friday, down from $ 31.00 a barrel in the previous session.

Cash differentials for jet fell to a premium of $2.99 a barrel to Singapore quotes, down from $3.17 a barrel in the previous session.

Refining margins for jet slipped at a slower pace to $28.03 a barrel.

Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area rose by 6% to their highest since July 2021, data from Dutch consultancy Insights Global showed on Thursday. Gasoil stocks reached 2.3 million tonnes, rising as importers in the region increase Russian purchases ahead of a Feb. 5 EU ban on Russian oil product imports, said Insights Global’s Lars van Wageningen.

The March crack for 10 ppm Gasoil is lower at $25.60 /bbl. The 10 ppm regrade is at -$0.40 /bbl.

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

Asia’s spot premium for 0.5% very low sulphur fuel oil (VLSFO) eased on Friday amid a flurry of spot offers, snapping a rally that struck six-month highs.

The spot premium slid to $25.14 a tonne to Singapore quotes on Friday, while the February refining crack was at a premium of $12.04 a barrel to Dubai at the Asia close (0830 GMT), logging weekly declines of more than 15%.

Fuel oil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub dipped 1% to 1.11 million tonnes in the week ended Feb. 2, latest data from Dutch consultancy Insights Global showed.

The March crack for 180 cst FO is mildly higher at – $19.55 /bbl with the visco spread at $2.15 /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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