Crude Oil
Oil prices edged lower on Monday as worries surrounding the resumption of U.S.-China trade talks overshadowed support from OPEC-led supply restraint. Brent crude futures lost 59 cents to settle at $61.51 a barrel. WTI crude fell 31 cents to settle at $52.41 a barrel.
Beijing expressed anger at a U.S. Navy mission through the disputed South China Sea, raising concerns whether the two countries can reach a trade deal before its 1st March deadline.
Venezuela President Nicolas Maduro has sought OPEC support against the sanctions, citing their impact on oil prices and potential risks for other members of the producer group. The country also wants to double its oil sales to India and is open to barter payment arrangements with the world’s third-biggest crude consumer, Venezuelan Oil Minister Manuel Quevedo said on Monday.
U.S. crude traders are bracing for increasing stockpiles at Cushing, Oklahoma as unexpected refinery issues add to inventories that are already at the highest in more than a year.
Naphtha
Asia’s naphtha crack was at a three-session high on Monday at $37.70 a tonne.
The February crack has however improved to -$ 7.00 /bbl. The March crack is at -$ 7.05 /bbl
Gasoline
Asia’s gasoline crack returned to a small premium of 6 cents a barrel as demand from India, Sri Lanka and Indonesia was seen.
Sri Lanka emerged with a tender to buy 318,750 barrels of 92-octane grade petrol for March 20-21 arrival at Colombo while Indonesia’s Pertamina was seeking 200,000 barrels of 88-octane grade for March lifting from either Singapore or Malaysia. These tenders came at a time when India was also seeking petrol to cater to its local demand.
The February crack has dropped to -$ 0.20 /bbl. The March crack is at $ 0.25 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil were at 33 cents a barrel to Singapore quotes on Monday, compared with a discount of 32 cents a barrel on Friday.
Quite a few gasoil cargoes from Asia are heading towards the West, but the arbitrage window is not quite open. The gasoil EFS was around minus $16 per tonne on Monday.
Two newly-built very large crude carriers (VLCCs) — Ascona and Olympic Laurel — that loaded diesel cargoes in Asia on the maiden voyages last month are expected to discharge in West Africa, while two other newbuilds, Dijilah and Front Defender, are expected to discharge in Europe.
Cash differentials for jet fuel widened their discounts by a cent to be at 20 cents a barrel to Singapore quotes on Monday.
The February crack has dropped to $ 13.05 /bbl with the 10 ppm crack at $14.0 /bbl. The regrade has dropped to $ 0.55 /bbl.
The March crack is $ 13.85 /bbl with the 10 ppm crack at $14.80 /bbl. The regrade is at $ 0.40 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Fuel oil refining margins slipped on Monday, but remained near a three-year peak touched last week on the back of weaker crude prices. The mainstay 380-cst barge crack for March fell to minus $3.44 a barrel over Brent crude during Asian trading hours, down from minus $3.32 a barrel on Friday.
Refining margins for the Asian benchmark 180-cst fuel oil dropped to a premium of $1.37 a barrel over Dubai crude on Monday, compared with $1.52 a barrel on Friday.
Cash premiums for 380-cst high-sulphur fuel oil were at $2.96 a barrel to Singapore quotes on Monday, down from $3.43 per barrel on Friday. The prompt-month time spread, which has remained in backwardation since April last year, narrowed by $1.25 a tonne to a premium of $3.75 per tonne on Monday.
The February 180 cst crack has improved to $ 1.55 / bbl with the visco spread at $ 0.45 /bbl.
The March180 cst crack is at $ 1.45 / bbl with the visco spread at $ 0.60 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh hedges for 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.