Oil prices rose about 1 percent on Wednesday, boosted by signs of strong U.S. demand for distillate products. Brent crude oil futures gained 71 cents to settle at $62.69 a barrel, while WTI crude futures rose 35 cents to settle at $54.01 a barrel.
While funds continue to look for signals to buy, the marked increase in distillate demand being one such signal, the markets continue to be wary of a global economic slowdown.
Worries about weaker global economic growth and the U.S. China trade dispute continue to dampen market sentiment. Oil prices fell on Tuesday after a survey showed euro zone business expansion nearly stalled in January.
U.S. government data on Wednesday showed that domestic crude inventories rose less than expected last week even as refineries hiked output. Stocks increased 1.3 million barrels in the week ended Feb. 1, compared with analysts’ expectations for an increase of 2.2 million barrels. Gasoline stocks increased by 513,000 barrels, less than anticipated, while distillate stockpiles fell a greater than expected 2.3 million barrels.
The material balance statement continues to be at great odds with the reported stocks suggesting that there may well be a huge crude draw next week. Likewise, we wouldn’t be surprised to see a build in distillate stocks announced in the next week.
Asia’s open specification naphtha inter month premiums narrowed for the first time on Monday in almost 1 1/2 week on muted demand as key markets, including South Korea were closed. Second half March naphtha price on Monday was $8 a tonne higher than the price for second half April versus $11.25 a tonne on Friday.
Buyers have mostly made their purchases for cargoes delivering in March between Jan. 16 and Feb. 1, with premiums having shot up last week due to tighter supplies. Cargoes sold last week for second half March delivery to Japan and South Korea were seen in premium levels of $12 to $13 a tonne to Japan quotes on a cost and freight (C&F) basis.
The February crack has dropped to -$ 7.05 /bbl.
No news on Gasoline markets today.
Light distillate stocks in Fujairah fell by 675 KB to 11.3 million tonnes in the week to February 4. Stocks are still much higher than the previous year.
The February crack has improved to -$ 0.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
India’s gasoil markets were giving off mixed signals with Nayara Energy looking to export gasoil even as HPCL is looking to by gasoline and gasoil in a term contract that could signal a major overhaul to some units of its refinery.
Stocks in Fujairah rose by over a million barrels to 2.27 million barrels, a 9 week high.
The February crack has improved to $ 12.60 /bbl with the 10 ppm crack at $13.55 /bbl. The regrade has dropped to $ 0.70 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash premiums for Asia’s mainstay 380 centistoke high sulphur fuel oil slipped to a near one month low on Monday, as suppliers accepted lower prices in the Singapore trading window amid sluggish demand and ample prompt supplies ahead of the Lunar New Year holiday this week. The 380 cst fuel oil cash premium declined to $3.22 a tonne to Singapore quotes, from $3.86 a tonne in the previous session. This was the lowest since Jan. 7.
Stocks in Fujairah rose by 580 kb to 8.73 million tonnes which is a 5 1/2 month for stock levels.
The February 180 cst crack has jumped to $ 1.55 / bbl with the visco spread at $ 0.50 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Fuel Oil cracks have once again spiked. We shall hedge March at + $ 1.20 / bbl and 2Q19 at $ 0.30 /bbl
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.