Crude Oil
Oil futures gained 1% on Wednesday, boosted by a surprise drawdown in U.S. crude stockpiles. Brent crude futures settled at $70.37 a barrel, up 49 cents. WTI crude futures rose 72 cents to settle at $62.12 a barrel.
Washington, on Wednesday, also threatened to impose more sanctions on Iran ‘very soon’ and warned Europe against doing business with Tehran.
China’s crude imports in April hit a record for the month, at 10.6 million barrels per day (bpd). The country is the world’s biggest oil importer. Market sources tracking trade data attributed this to extra imports out of Iran prior to the imposition of the sanctions.
Saudi Arabia is expected to keep its crude exports below 7 million bpd in June, while output would stay under its production quota under a global deal to cut supply. Azerbaijan’s oil minister said it had received assurances from Saudi Arabia, de facto OPEC that Riyadh would not take any unilateral decisions on the global oil deal until the group’s June meeting.
U.S. crude inventories fell 4 million barrels last week, the Energy Information Administration said, compared with analysts’ forecast of a 1.2 million-barrel build. The drop is largely attributable to a drop in net imports of the order of 430 kb/d.
Product stocks stayed virtually flat. A huge increase in gasoline demand to over 9.8 mb/d was offset partially by a very high level of gasoline imports. Distillate stocks saw a significant drop in demand. As per our Material Balance statement above, both products should have built slightly rather than drop slightly as reported.
Naphtha
Asia’s naphtha crack lost 18 percent of its value from the previous session to reach $37.60 a tonne, the lowest since Feb. 14.
The May crack is slightly lower at – $ 6.35 /bbl
Gasoline
Asia’s gasoline crack fell for the third straight session on Wednesday, this time by 40.7 percent to reach $2.68 a barrel, the lowest since March 4. Tight supplies seen last month had mostly eased in Asia as well as in the United States.
Light distillate stocks in Fujairah dropped by 1.2 million barrels to 10.77 million barrels.
The May crack is lower at $ 4.05 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil widened to 14 cents a barrel to Singapore quotes on Wednesday, compared with a discount of 7 cents per barrel a day earlier.
Cash discounts for jet fuel were at 50 cents a barrel to Singapore quotes, as against a discount of 31 cents on Tuesday.
Middle Distillate Stocks in Fujairah increased by 595 Kb to 2.59 million barrels. This is just short of the year’s high of 2.67 million barrels seen in March.
The May crack for 500 ppm Gasoil is higher at $ 13.20 /bbl with the 10 ppm crack at 13.85 / bbl. The regrade is steady at -$ 0.35 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst high-sulphur fuel oil (HSFO) barge crack extended losses on Wednesday, slipping to its widest discount to Brent crude in nearly two weeks despite weaker benchmark crude oil prices.
The June 380-cst barge crack was at about minus $8 a barrel against Brent, down from minus $7.83 a barrel in the previous session. Wednesday’s losses mark four straight sessions of declines in the crack value, down from minus $6.76 a barrel a week ago. The crack discount was last wider at $8.39 a barrel on April 23.
Fuel Oil stocks in Fujairah dropped by 1.422 million barrels to 10.36 million barrels.
The May 180 cst crack is higher at – $ 2.65 / bbl with the visco spread at $ 1.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to report 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.