Crude Oil
Oil prices rose more than 1 percent on Monday, lifted by comments from Saudi Energy Minister Khalid al-Falih that an end to OPEC-led supply cuts was unlikely before June. Brent crude futures were up 84 cents to settle at $66.58 a barrel. WTI crude futures rose 72 cents to settle at $56.79 a barrel, a 1.28 percent..
Falih told Reuters on Sunday it would be too early to change the production curb pact agreed by the OPEC+ group before its meeting in June.
In addition, a Saudi official said the country planned to cut crude oil exports in April to below 7 million barrels per day.
U.S. oil production could become less responsive to crude prices as major oil companies expand operations in the nation’s shale fields, IEA officials said at the CERAWeek energy conference in Houston on Monday.
So far oil demand has held up, especially in China, where imports of crude remain above 10 million barrels per day (bpd). Yet a slowdown in economic growth could eventually dent fuel consumption and pressure prices.
Hedge funds and other speculators raised their combined futures and options position in New York and London by 21,416 contracts to 155,426 in the week ended March 5, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Naphtha
Asia’s naphtha crack was at a two-session high of $49.10 a tonne, supported by demand.
South Korea’s YNCC bought more than 100,000 tonnes of open-specification grade naphtha for second-half April delivery at premiums around $3.50 a tonne to Japan quotes on a cost-and-freight basis. But the current level was down versus the $4 a tonne premium YNCC had paid on Feb. 20 for cargoes scheduled for first-half April delivery.
The March crack is higher at -$ 6.50 /bbl. The April crack is at -$ 6.55 /bbl
Gasoline
Asia’s gasoline crack returned to a near five-month high of $5.48 a barrel premium to Brent crude on Monday after a brief fall last Friday as supplies tightened on firmer demand and refinery maintenance. Asia’s gasoline crack has been pushing higher since early March.
Spot prices were also trending up. Taiwan’s CPC sold a 92-octane grade gasoline cargo for April loading at more than $2 a barrel to Singapore quotes on a free-on-board (FOB) basis, making this one of the highest premiums it has fetched in many years.
The March crack is higher at $ 4.85 /bbl. The April crack is at $ 4.45 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil , however, narrowed their discounts to 2 cents a barrel to Singapore quotes on Monday, boosted by firmer buying interest in the physical market in Singapore. They were at a discount of 5 cents per barrel on Friday.
Cash discounts for jet fuel were at 14 cents a barrel to Singapore quotes, compared with a discount of 10 cents a barrel on Friday.
The current refinery turnarounds in the region would keep a lid on supplies in the near term and summer travelling demand would give a further boost to the aviation turbine fuel in the next couple of months. Asia Pacific airlines posted a demand increase of 7.1 percent in January compared to the same month last year, and up from 5 percent growth in December, the International Air Transport Association (IATA) said in a statement last Thursday. Domestic passenger demand grew about 12 percent in India in January, and around 14 percent in China, according to IATA data.
The March crack is has dropped to $ 13.35 /bbl with the 10 ppm crack at $14.35 /bbl. The regrade is steady at – $ 0.65 /bbl.
The April crack is at $ 13.60 /bbl with the 10 ppm crack at $14.60 /bbl. The regrade is at – $ 0.30 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst fuel oil barge crack’s discount to Brent crude narrowed on Monday after hitting a more than one-week low on Friday despite higher benchmark crude oil prices.
In the physical markets, sustained buying interest for cargoes in the Singapore trading window continued to characterise the market, but slightly lower deal values on Monday weighed on 380-cst cash premiums, which slipped 19 cents a tonne from Friday to a four-session low of $3.07 per tonne to Singapore quotes.
The March 180 cst crack is higher at $ 1.25 / bbl with the visco spread at 80 cents/bbl.
The April 180 cst crack is at $ 1.05 / bbl with the visco spread at 75 cents/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
We have closed out the first of our 2020 positions in Jet today. The Cal-20 middle distillate cracks are essentially a play on what is going to happen to Fuel Oil in the wake of IMO 2020. Our view, for now, is that it is not going to upset cracks significantly.
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.