Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

For the second time in a fortnight, U.S. crude prices broke below the $100-per barrel support, even ending under that mark on Tuesday.

Brent crude futures settled down $3.48, or 3.3%, at $102.46 a barrel, after an intraday low at $101.73. After a 6% rally in two previous weeks on speculation that Europe was nearing a much-awaited ban on Russian oil, Brent had given back 9% week-to-date on worries that the United States might fall into a recession from aggressive rate hikes by the Federal Reserve to beat inflation growing at its fastest pace in 40 years.

WTI crude futures settled Tuesday’s trade down $3.33, or 3.2%, at $99.76. WTI hit a session low of $98.91 earlier, its lowest since the $97.06 bottom of April 26. The U.S. crude benchmark gained almost 8% in two previous weeks of trade to concede almost 10% within the first two days of this week.

Tuesday’s slump in crude prices came as the American Automobile Association reported the average price of gasoline across US pumps at a record high of $4.37 a gallon. Earlier, gasoline prices had dipped to as low as $4.07 in April s $4.07 after the Biden administration announced the release of unprecedented volumes of crude oil from the US Strategic Petroleum Reserve, or SPR, in a bid to reduce the global supply strain heightened by the sanctions on Russia.

Central bank officials at the Federal Reserve were, meanwhile, debating the possibility of a 75-basis point rate hike when they meet in June, after instituting increases of 50-bps and 25 bps at their May and March meetings, respectively. Those will be the highest U.S. rate hikes in at least a generation as the Fed tries to beat back prices rising at their fastest since the 1980s.

api data

The API data was distinctly bearish with builds across the board even as the market expected draws. We shall await the official data later today.

At a global level, the death toll from the COVID-19 virus rose to 6.28 Million (+2,080 DoD) yesterday. The total number of active cases fell by 70,000 DoD to 38.86 million. (Click here for details).

Asia’s Naphtha refining profit margin rose on Tuesday after falling nearly 24% last week on demand concerns, as crude prices dropped. The crack rose to $111.58 a tonne from $86.45 in the previous session.

The June crack is higher at -$ 0.35 per barrel 

Gasoline crack eased to $25.12 per barrel, down from $26.85 in the previous session, after rising 17.7% last week, supported by expectations of stronger demand as peak summer driving season draws near.

The June crack is lower at $28.10 per barrel.

Click Here for a graphical depiction of Global Gasoline stocks by region.

Asia’s cash premiums jet fuel rose on Tuesday, climbing to their highest in more than a month, riding on a steady recovery in the region’s aviation demand, primarily led by China’s domestic market.

Cash differentials for jet fuel jumped to a premium of $5.68 a barrel to Singapore quotes, the highest since April 4. They were at a premium of $3.90 per barrel on Monday.

Refining margins, or cracks, for jet fuel rose to $33.78 per barrel over Dubai crude during Asian trading hours, compared with $33.60 per barrel a day earlier.

Global airline capacity increased by 2% this week to 90.7 million seats, the highest so far this year, according to OAG. Total scheduled airline capacity in Northeast Asia in the week to Monday rose 13.7% from the previous week, OAG data showed. “As has been the trend in recent weeks, the largest week-on-week capacity changes have occurred in China with a net effect of 1.9 million seats being added back to domestic schedules in North East Asia this week after last week’s reductions,” aviation data firm OAG said in statement.

The June crack for 500 ppm Gasoil is higher at $40.40 /bbl with the 10 ppm crack at $41.40 /bbl. The regrade is at -$5.00 /bbl.

Click Here for a graphical depiction of Global Distillate stocks by region.

Asia’s cash premiums for 380-cst high-sulphur fuel oil (HSFO) dropped for a fifth straight session on Tuesday, sliding to their lowest level in nearly seven weeks, hurt by muted trading in the physical market. The cash differentials for 380-cst HSFO fell to a premium of $9.21 per tonne to Singapore quotes, a level not seen since March 23. They were at $14.49 per tonne a day earlier.

The cash premiums for 180-cst HSFO were at a premium of $21.37 per tonne to Singapore quotes on Tuesday, compared with $25.45 per tonne on Monday.

The front-month barge crack for 380-cst HSFO traded at a discount of $13.54 a barrel to Brent on Tuesday, as against minus $14 a barrel in the previous session. Cash premiums for Asia’s 0.5% VLSFO were at $19.58 a tonne to Singapore quotes on Tuesday, up 8 cents from a day earlier.

The June crack for 180 cst FO is lower at – $3.15 /bbl with the visco spread at $3.95 /bbl.

Click Here for a graphical depiction of Fuel Oil stocks by region.

No fresh activity 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.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

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