Crude Oil
Oil prices held near flat on Tuesday as the market wavered on expectations the United States and China could reach a trade agreement. Brent crude futures gained 19 cents to settle at $65.86 a barrel. U.S. crude, however, settled 3 cents lower at $56.56 a barrel.
Investors also weighed OPEC-led efforts to tighten crude supply against the restart of Libya’s biggest oilfield and the prospect of weaker demand from China.
Libya’s NOC had declared yesterday that it was reopening the El Sharara oilfield which has a capacity of 315,000 barrels a day. The field had been closed since December on account of militant activity.
China’s government said it was targeting economic growth of 6.0 to 6.5 percent in 2019, lower than the 6.6 percent growth reported last year and raising the prospect of slowing fuel demand.
The fate of the US China trade talks too is not very certain. U.S. Secretary of State Mike Pompeo said President Trump would reject any trade deal that is not perfect, but added the White House would keep working on an agreement.
API Data
Prices edged lower in post-settlement trade after data from the API showed a large build up in crude stocks. Crude inventories rose by 7.3 million barrels in the week ending March 1 to 451.5 million. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.1 million barrels. Gasoline stocks drew marginally and less than estimated. Distillate stocks, however, drew substantially.
The U.S. government’s official figures are due on Wednesday.
Naphtha
Asia’s naphtha crack fell to a four-session low of $45.50 a tonne on Tuesday with demand mostly muted.
The March crack is better at -$ 6.00 /bbl
Gasoline
Asia’s gasoline crack shot up to a more than four-month high of $2.70 a barrel. Pockets of gasoline demand, especially from Indonesia, coupled with heavy refinery maintenance were boosting gasoline crack.
Taiwan’s Formosa Petrochemical has concluded a 12-month gasoline contract starting April 2019 with more than five buyers at discounts between 20 cents and 30 cents a barrel to Singapore 92-octane quotes on a free-on-board (FOB) basis. This is a yearly contract that Formosa issues through tenders, typically offering one medium-range tanker of gasoline per quarter.
The March crack has once again jumped to $ 3.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil were at 29 cents a barrel to Singapore quotes on Tuesday, compared with a 28-cents discount a day earlier.
While cracks seem to be easing, shipping cargoes out of the region will be difficult as the Gasoil EFS, at around minus $16 per tonne on Tuesday is not large enough to work the arbitrage. At current freight levels, the break even is somewhere below minus $18 a tonne.
Cash discounts for jet fuel remained unchanged at 29 cents a barrel to Singapore quotes as the physical market in the Singapore window remained quiet with no bids or deals on Tuesday.
The March crack is lower at $ 14.90 /bbl with the 10 ppm crack at $15.85 /bbl. The regrade is lower at – $ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Ex-wharf premium’s for 380-cst bunkers for March loading were nearly halved from the previous month, amid improved supplies of the mainstay marine fuel grade.
March ex-wharf term premiums for 380-cst HSFO were concluded at about $3-$4 per tonne to Singapore quotes, compared with term premiums of about $7-$8 per tonne in February.
In a recent sign of ample prompt bunker supplies, deals for spot 380-cst HSFO ex-wharf parcels last week were concluded at premiums below $2 per tonne to Singapore quotes. However, a changing supply outlook since then has pushed spot ex-wharf premiums higher back towards $3-$4 per tonne this week amid tightening arbitrage inflows into Singapore and higher blending costs.
The March180 cst crack is lower at $ 2.30 / bbl with the visco spread at $ 1.15 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh hedges 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.
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.