Oil futures edged higher on Friday but ended the week with a loss on renewed concerns about slowing global demand and after the dollar posted its best week in six months. Brent crude oil futures gained 39 cents to settle at $62.02 a barrel, while WTI crude futures rose a modest 8 cents to settle at $52.72 a barrel.
On the week, Brent dipped more than 1 percent. But WTI recorded a weekly slump of more than 4 percent, its steepest this year.
The market was relatively quiet on Friday, with volume of 575,000 contracts, short of the 200-day average of 597,000 daily contracts traded. The dollar gained 1.1 percent against a basket of currencies, its best performance since August, which would result in hurting oil prices.
The market was supported modestly on Friday by news that the United States and China may still be able to meet a March 1 deadline to resolve specific issues in their trade dispute. The White House said on Friday that Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would travel to Beijing for principal level meetings next week, easing concerns that the deadline would be missed and result in higher tariffs on goods.
The European Commission on Thursday sharply cut its forecasts for euro zone economic growth due to global trade tensions and an array of domestic challenges.
The number of active oil rigs in the US rose to 854 as producers seemed reassured of the drilling being worth their while.
Asia’s naphtha crack hit a two-week low of $29.40 a tonne on Friday on subdued demand.
The February crack has however improved dropped to -$ 7.25 /bbl. The March crack is also at -$ 7.25 /bbl
Asia’s gasoline crack rose to its highest since Jan. 8 on pockets of buying interest. Although still persisting at discount levels, the current gasoline crack at 13 cents a barrel sharply contrasted with the discount of 97 cents in the previous day.
Strong demand was seen from India. Elections in Indonesia and India, coupled with upcoming refinery maintenance in Asia may see fundamentals improving for sellers.
However, overall, India remains a net exporter of gasoline and for now, gasoline stocks were still abundant across regions of Singapore, Europe and the United States.
Although gasoline stocks held independently at the Amsterdam Rotterdam Antwerp (ARA) refining and storage hub have fallen to a six-week low of 1.34 million tonnes in the week to Thursday, this was only 3.3 percent below the record high volume of nearly 1.39 million tonnes in late March 2018.
Gasoline stocks in ARA have fallen to a six-week low of 1.34 million tonnes in the week to Thursday, this was only 3.3 percent below the record high volume of nearly 1.39 million tonnes in late March 2018.
The February crack has improved to -$ 0.15 /bbl. The March crack is at $ 0.30 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for 10ppm gasoil were at 32 cents a barrel to Singapore quotes on Friday, compared with Thursday’s discount of 31 cents per barrel.
Gasoil Stocks in ARA rose marginally by 27 KT to 2.4 million tonnes.
Jet cash discounts were at 19 cents a barrel to Singapore quotes on Friday, compared with a discount of 30 cents a barrel on Thursday.
Expectations of tighter supply as some regional refiners are scheduled for spring maintenance outages. Another factor supporting the jet fuel market is steady demand from the region’s robust aviation sector.
Asia Pacific airlines’ passenger traffic last year rose 7.3 percent, compared to 2017, driven by robust regional economic expansion and increased route options for travellers, the International Air Transport Association (IATA) said in a statement on Thursday.
The February crack has improved to $ 13.20 /bbl with the 10 ppm crack at $14.15 /bbl. The regrade has dropped to $ 0.85 /bbl.
The March crack is $ 14.00 /bbl with the 10 ppm crack at $14.95 /bbl. The regrade has tanked to $ 0.45 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Refining margins for fuel oil hit a three-year high on Friday, buoyed by weaker crude prices, while cash premiums for the mainstay 380-centistoke high sulphur fuel oil (HSFO) edged up as the prompt month spread widened its backwardated structure. The 380 cst barge crack for March rose to minus $3.10 a barrel over Brent crude during Asian trading hours, up from minus $3.33 a barrel on Thursday. The margins for 380 cst fuel oil have risen about 36 percent this week in their biggest weekly gain since November 2018.
Cash premiums for 380 cst high sulphur fuel oil inched up to $3.43 a barrel to Singapore quotes on Friday but were within close sight of a one-month low of $3.15 per barrel touched in the previous session as the prompt month spread widened by 50 cents to a premium of $5 per tonne.
The Asian benchmark 180 cst fuel oil crack to Dubai crude widened to a fresh high in over two months and were at a premium of $1.52 a barrel, compared with $1.36 a barrel on Thursday.
ARA fuel oil inventories rose by 59 KT to 1 million tonnes in the week ended Feb. 7.
The February 180 cst crack has dropped to $ 1.50 / bbl with the visco spread at $ 0.45 /bbl.
The March180 cst crack is at $ 1.25 / bbl with the visco spread at $ 0.60 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The sharp spike in FO cracks on Friday allowed us to take and close out a position on 3Q19 within 1 day. These are opportunities that the risk management teams should be looking for.
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.