Crude Oil
Crude oil futures were mixed on Wednesday after DOE data showed an unexpectedly sharp build in crude inventories and a third straight drop in gasoline stocks. Brent crude futures gained 13 cents to settle at $65.9 a barrel. U.S. crude, however, settled 34 cents lower at $56.22 a barrel.
We would attribute the positive close on Brent to a continued clinging on to the hope of the US China trade talks fructifying. Nevertheless, the path forward looks grim. The US trade deficit with the rest of the world has jumped from $ 552 billion to $ 621 billion. The trade deficit with China is $ 419 million in 2018, a record high.
U.S. crude inventories rose 7.1 million barrels last week, far exceeding analysts’ expectations for a build of 1.2 million barrels.
Gasoline stocks, however, fell 4.2 million barrels, compared with analysts’ expectations for a 2.1 million-barrel drop. Distillate stocks also drew substantially at 2.3 million barrels. Both product stocks are now below last year’s levels for this time.
However, the Gasoline draw does not appear to be supported by the material balance statement below.
The crude build can be attributed to a net build of 500 kbd in net imports reinforcing our point that the drop in crude stocks was only circumstantial rather than systemic. As per the material balance statement, gasoline stocks should have actually reported a build.
Naphtha
No fresh news on Naphtha markets today.
The March crack is lower at -$ 6.10 /bbl
Gasoline
The gasoline markets continued their strong recovery with the March swap being valued over $ 3.5 /bbl at close of day yesterday.
Stocks in Fujairah rose by 534 KB to 10.99 million barrels in the week to March 4 as per data from S&P Global.
The March crack is steady at $ 3.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil narrowed to 27 cents a barrel to Singapore quotes, boosted by firmer trading activity in the Singapore physical market. The gasoil cash differentials were at a discount of 29 cents a barrel on Tuesday.
The March/April time spread for the benchmark gasoil grade flipped to a contango to be at a discount of 10 cents a barrel. The April/May spread, however, was at a premium of 11 cents per barrel.
Cash discounts for jet fuel were at 20 cents a barrel to Singapore quotes, compared with a discount of 29 cents a barrel on Tuesday.
Middle distillate stocks in Fujairah increased by 168 Kb to 1.98 million barrels.
The March crack is lower at $ 14.40 /bbl with the 10 ppm crack at $15.35 /bbl. The regrade is higher at – $ 0.65 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Firm buying interest for physical cargoes of 380-cst fuel oil helped cash premiums of the fuel extend gains on Wednesday to a near one-month high.
Trade volumes for cargoes of HSFO in the Singapore window have spiked since the start of the month with 580,000 tonnes having traded so far, compared to a total of 780,000 tonnes in February.
The 380-cst fuel oil cash premium rose for a sixth straight session to $3.35 a tonne to Singapore quotes, up from $3.19 a tonne in the previous session.
Expectations of slightly lower arbitrage volumes in March have recently helped lift market sentiment. Meanwhile, fuel oil stocks at Fujairah saw their biggest weekly drop after falling by 1.215 million barrels in the week to March 4.
The March180 cst crack is lower at $ 2.00 / bbl with the visco spread at $ 1.10 /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.