Crude Oil shrugged off bearish DOE data as traders chose to focus on possible geopolitical tension ahead. Brent closed $1.02 /bbl higher at $72.06 /bbl while WTI gained $1.31 /bbl to settle at $66.82 /bbl.
If one watched the price action, the market spiked up immediately after the bearish data as traders seemed to be wanting to take that data point into consideration before increasing length. In the frenzied buying that followed, stops must have been triggered to take Brent to a three year high of $ 73.09 / bbl. However, this was not sustainable yesterday and prices gradually dropped to settlement levels.
Geopolitical tensions remained high as US President Donald Trump fired tweets on Wednesday warning Russia to “get ready” for US missiles in Syria. This is in retaliation of an alleged chemical attack on Saturday which killed at least 40 people. The chemical attack is still being denied by the Syrian government and by Russia.
Aramco and India’s Ratnagiri Refinery signed a deal on Wednesday to construct a $44b refinery and petchem project along India’s West Coast, which will be able to refine up to 1.2mbd.
EIA reported a larger-than-expected build in US crude stocks of 3.306 million barrels, as exports fell to 1.205 mb/d while imports rebounded strongly to 8.65 mb/d.
The build notwithstanding, crude stocks still remain around 2.6% below the five year average. Gasoline stocks built inspite of an increase in refinery runs to 93.5% as increase in demand was dismal and exports of gasoline fell. Distillate stocks fell largely due to a strong increase in demand of 283 kb/d coupled with a strong rise in exports of 209 kb/d.
A look at the material balance table below shows a strong disparity between the reported increase in stocks and the calculated increase, the latter being close to 12 million barrels. This difference will show up somewhere in the future.
For detailed charts on crude and product stocks, please visit our US Department of Energy Data page
Asia’s naphtha crack for front-month second-half May on Wednesday hit a two-week low of $82.33 /MT, dragged down by firm Brent crude at above $70 /bbl and weak gasoline fundamentals.
Demand for naphtha in Asia remained firm but some traders were not expecting the strength to extend beyond premiums for May cargoes due to coming cracker maintenance in Japan and Taiwan.
The balance April crack for Naphtha has sunk to – $ 1.50 /bbl. today. The May crack is valued at -$ 1.65 /bbl
Asia’s gasoline crack to Brent fell to $7.01 /MT, the lowest since January 5 this year, deeply hurt by high supplies and rising crude prices. While stocks in Fujairah dipped by half a million barrels to 7.3 million barrels, stocks in Japan rose to 10.7 million barrels, an increase of 340 kb over the last week.
The balance April crack has has dropped to $ 10..20 /bbl . The May crack is at $ 10.85 /bbl
Asia’s jet fuel cash premiums slipped on Wednesday on concerns the upcoming summer travelling demand for the aviation fuel may not be as strong as winter heating demand this year. Cash differentials for jet fuel fell to 95 cents a barrel to Singapore quotes on Wednesday, down from $1.02 on Tuesday. In February, Asian jet fuel margins were at their highest in more than two years, especially as Japan and South Korea burnt more kerosene to heat their homes during a cold snap in the region.
Asia’s cash differentials for gasoil with 10 ppm sulphur content fell on Tuesday, while the prompt month spread for the industrial fuel narrowed as traders were concerned refinery turnarounds in the region have not tightened supply as expected. The cash differential for 10 ppm gasoil fell to 26 cents a barrel to Singapore quotes, compared with 40 cents on Monday. The increase in commercial stockpiles of middle distillates in Singapore is also weighing on gasoil prices in the region.
On Wednesday, the cash differential for gasoil with 10ppm sulphur content rose to 32 cents a barrel to Singapore quotes, compared with 26 cents on Tuesday
Middle distillate stocks in Fujairah rose by over 1 million barrels last week to 2.85 million barrels, their highest levels since October 9, 2017.
The April gasoil crack is at $ 15.30 /bbl with the 10 ppm crack at $ 16.05 /bbl. The regrade has jumped to $ 1.05 /bbl.
The May gasoil crack is at $ 15.30 /bbl with the 10 ppm crack at $ 16.00 /bbl. The regrade is at $ 0.95 /bbl.
The front-month fuel oil crack to Brent crude firmed on Wednesday amid expectations of rising seasonal summer demand and narrowing supplies. The May barges 380-cst fuel oil crack to Brent crude narrowed its discount to $12.25 a barrel on Wednesday from about $12.45 a barrel in the previous session. This came despite Brent crude oil prices rising to three year highs.
Stocks in Fujairah rose by 1.4 million barrels to 8.45 million barrels, their highest levels since 15th January.
The April 180 cst crack has sunk further to -$ 6.20/ bbl. The visco spread has come in $ 2.00 /bbl
The May 180 cst crack is also lower at -$ 6.25/ bbl. with the visco spread narrowing $ 1.70 /bbl
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.
For now, the May regrade looks to have promise with a value close to $ 1.00 /bbl. We would recommend hedging a small volume at the current value of 0.98 and add more if it increases seriously.
The values for 500 ppm gasoil and jet for Cal 2019 of $ 17.75 /bbl and $ 18.60 /bbl continue to look promising. We would look to add more should gasoil 500 ppm rise beyond $ 18.00 /bbl.
Today’s status of active recommendations is below.
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.