Crude Oil
Oil prices rebounded on Wednesday, snapping a two-day slide, as the market looked beyond government data indicating that output was recovering faster than refining after last month’s storm-related outages in Texas.
Brent futures settled at $67.90, up 46 cents, or 0.6%. Brent’s intraday low was $66.52.
WTI crude settled at $64.44 per barrel, up 38 cents, or 0.7%. WTI earlier hit an intraday low of $63.14.
Saudi Arabia’s crude oil exports fell just slightly in February, in stark contrast to the bold voluntary production cuts that the Kingdom had offered to make, according to PetroLogistics and Kpler data cited by Reuters. According to PetroLogistics, Saudi Arabia’s February exports likely fell by just 300,000 bpd. Kpler data suggested the fall to be as low as 195,000 bpd.
Iraq’s SOMO’s OSPs for Apr’21 saw it cut levels for all Europe-bound grades, while the US saw rangebound and Asia a slight increase, according to a company notice on 10 Mar’21.
S&P Global Platts will defer changes to its core dated Brent oil benchmark after industry pressure, it said on Wednesday.
DOE data
We are not sure what to make out of this data as it appears to be extremely out of sync with expected balances as suggested by our material balance statement. However, we will share a few insights and possible takeaways
The first important take away is that crude production has rebounded to pre storm levels. This implies that crude shortage is unlikely especially if prices continue to prevail at these heights. The shale refiners will be able to produce and hedge them for all of next year.
The second important take away is the rebound in product demand. This is the first week since November 2020 that we have seen gasoline demand at anywhere near these levels of 8.7 mbpd. If this continues, it will be supportive for oil markets. The distillate demand, at 4.4 mbpd, is the highest since November 2019 i.e. well before Covid was even a concept.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 2,631,265 (+9,948 DoD) yesterday. The total number of active cases fell by around 70,000 DoD to 21.76 million. (Click here for details)
Naphtha
Asia’s naphtha crack weakened for a third consecutive session on Wednesday to its lowest since Feb. 18. The crack fell to $108.33 per tonne, from $110.60 per tonne in the previous session.
The April crack is lower at $1.00 /bbl
Gasoline
Asia’s gasoline crack strengthened further to $4.99 per barrel, up from $4.38 per barrel the previous day.
Light distillate stocks in Fujairah fell by 523 kb, or 7.3%, to 6.62 million barrels,Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 10% to 3.7 million barrels in the week ended March 8, data via S&P Global Platts showed. This is their lowest levels since November 16 last year.
The April crack is higher at $8.25 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for 10 ppm gasoil narrowed further to a discount of 21 cents to Singapore quotes on Wednesday, 3 cents higher than the previous day.
Cash differentials for jet fuel widened to a discount of 56 cents per barrel to Singapore quotes on Wednesday, compared with a discount of 41 cents per barrel a day earlier.
Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 10% to 3.7 million barrels in the week ended March 8, data via S&P Global Platts showed. This is their lowest level since August 17 last year.
The April crack for 500 ppm Gasoil is lower at $5.60 /bbl with the 10 ppm crack at $ 6.40 / bbl. The regrade is at -$ 1.55 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) front-month time spread fell to a more than three-month low on Wednesday as rising supplies continued to weigh on market sentiment.
The April/May VLSFO time spread slipped to a near 2021 low of $1.50 a tonne on Wednesday, down from $1.75 a tonne in the previous session, Refinitiv data in Eikon showed.
Fujairah inventories for heavy distillates and residues fell by 1.936 million barrels, or about 20.2%, to 7.636 million barrels, data via S&P Global Platts showed.
The April crack for 180 cst FO is lower at -$3.40 /bbl with the visco spread at $1.05 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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 refinery.
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.