Oil prices settled higher on Tuesday as lockdowns eased in Shanghai and as Russian oil and gas condensate production fell to 2020 lows and OPEC warned it would be impossible to replace potential supply losses from Russia.
Brent crude futures rose $6.16, or 6.3%, to settle at $104.64 a barrel by 1:48 p.m. EDT.
WTI crude futures rose $6.31, or 6.7%, to settle at $100.60. On Monday, both benchmarks fell about 4%.
Russian oil and gas condensate production fell below 10 million barrels per day (bpd) on Monday to its lowest since July 2020, two sources familiar with data said on Tuesday, as sanctions and logistical constraints hampered trade. Sources said Russia’s average oil output fell more than 6% to 10.32 million bpd on April 1-11 from 11.01 million in March.
OPEC on Tuesday lowered its Russian liquids production forecast by 530,000 bpd for 2022, but also cut its forecast for growth in world oil demand, citing the impact of Russia’s invasion of Ukraine, soaring crude prices and resurgence of the pandemic in China.
Indian Oil Corp (IOC), which bought Russian Urals in previous tenders, has removed the grade from its latest crude tender. U.S. President Joe Biden told Indian Prime Minister Narendra Modi on Monday that buying more oil from Russia was not in India’s interest.
API Data
The API data was a bit ambivalent. While crude stocks showed a surprisingly large build, it was offset by large draws in product stocks. We shall await official date from the DOE today.
At a global level, the death toll from the COVID-19 virus rose to 6.21 Million (+3,170 DoD) yesterday. The total number of active cases fell by 330,000 DoD to 43.71 million. (Click here for details).
Asia’s naphtha and gasoline refining profit margins eased on Tuesday after a spike in crude oil prices pushed prices of the products higher, market watchers said.
The naphtha crack eased to $140.45 a tonne, down $2.52 from the last close.
The May crack is lower at $ 2.35 per barrel
Asia’s naphtha and gasoline refining profit margins eased on Tuesday after a spike in crude oil prices pushed prices of the products higher, market watchers said.
The gasoline crack slipped to $15.15 a barrel from $16.63 on Monday.
However, the downside was limited after Shanghai eased some Covid 19 restrictions easing concerns about Covid 19 demand.
The May crack is lower at $17.70 per barrel.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for jet fuel rose on Tuesday as airlines across the globe continued to add capacity to their schedules this week.
Cash premiums for jet fuel climbed to $2.05 a barrel to Singapore quotes, compared with $1.63 per barrel a day earlier.
India’s fuel demand rose to a three-year high in March, with petrol sales hitting an all-time peak, as the market accumulated supplies foreseeing price spikes while easing COVID-related curbs boosted demand. Sales of diesel in March stood at 7.71 million tonnes, about 18% higher from February, and 6.6% higher from a year earlier.
Global airline capacity gained 1.5% this week to 85.2 million seats, while capacity in South Asia this week was 7.5% higher compared with the corresponding week in pre-pandemic 2019, according to OAG.
Total scheduled airline capacity in Northeast Asia in the week to Monday jumped 7.2% from the previous week, while scheduled seats in Southeast Asia rose 1.8%, OAG data showed.
“The recent pattern in Chinese capacity, which has seen sizeable chunks of capacity taken out of schedules for Chinese domestic air travel, was reversed this week with airlines starting to add capacity back in,” aviation data firm OAG said in a statement.
The May crack for 500 ppm Gasoil is higher at $33.60 /bbl with the 10 ppm crack at $34.60 /bbl. The regrade is at -$5.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s cash premiums for 180-cst high-sulphur fuel oil (HSFO) rose further on Tuesday, hitting their highest in nearly three years, supported by firmer feedstock and utility demand amid scarce supplies.
The cash differentials for 180-cst HSFO surged to a premium of $35.67 per tonne to Singapore quotes, a level not seen since early October 2019. They were at a premium of $33.07 per tonne a day earlier.
Meanwhile, the cash differentials for 380-cst HSFO rose to a premium of $23.50 per tonne to Singapore quotes on Tuesday, up from $22.69 per tonne a day earlier.
The front-month barge crack for 380-cst HSFO traded at a discount of $12.41 a barrel to Brent on Tuesday, compared with minus $12.20 a barrel in the previous session.
Cash premiums for Asia’s 0.5% VLSFO climbed to $23.79 a tonne to Singapore quotes on Tuesday, up from $21.81 per tonne on Monday.
Sales of fuel oil in India stood at 580,000 tonnes, 11.5% higher from February, and about 14% higher from a year earlier.
The May crack for 180 cst FO is lower at $4.70 /bbl with the visco spread at $6.30 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We shall hedge the gasoil strip from Q3 onwards to Cal 23 at $22.90/bbl for Q3, $20.20 / bbl for Q4 and $17.75 / bbl for Cal 23.
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.