Crude Oil
Oil prices rose more than 1 percent on Tuesday after OPEC figures showed it cut production sharply in January, and as lead member Saudi Arabia said it would reduce its output in March by an additional 500,000 barrels. Brent crude gained 91 cents to settle at $62.42 a barrel. WTI crude rose 69 cents to settle at $53.10 a barrel.
OPEC said on Tuesday it had reduced oil production almost 800,000 bpd in January to 30.81 million bpd under its voluntary global supply pact. Saudi Arabia Energy Minister Khalid al-Falih told the Financial Times that the country would cut production to about 9.8 million bpd in March to bolster prices.
Growing investor optimism for a breakthrough in the latest round of U.S.-China trade discussions also boosted futures as members of both sides met in Beijing. U.S. President Donald Trump said he could push off the deadline to hike tariffs on Chinese imports if the two sides get close enough to striking a deal.
OPEC also cut its forecast for 2019 world oil demand, citing slowing economies and expectations of faster supply growth from rivals, underlining the challenge it faces in preventing an oil glut.
API Data
Crude inventories fell by 998,000 barrels in the week ended Feb. 8 to 447.2 million, compared with analysts’ expectations for an increase of 2.7 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 502,000 barrels. While Gasoline stocks built, distillate stocks drew significantly.
Naphtha
Asia’s naphtha crack extended gains to reach a four-session high of $42.68 a tonne.
The February crack has however dropped to -$ 7.05 /bbl. The March crack is at -$ 7.10 /bbl
Gasoline
Asia’s gasoline crack returned to the negative zone after turning to a slight premium in the previous session.
Demand from India and Indonesia gave the gasoline market only a brief period of support as regions spanning from Singapore to the United States and Europe were not lacking in supplies.
Indonesia’s Pertamina came with another tender seeking a total of 350,000 barrels of 92-octane grade gasoline for March loading from either Singapore or Malaysia. It was looking to buy 88-octane grade gasoline earlier in the week.
The February crack has dropped to -$ 0.95 /bbl. The March crack is at -$ 0.45 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil widened to 35 cents a barrel to Singapore quotes on Tuesday, compared with a discount of 33 cents a day earlier.
The Singapore cash discounts for jet fuel, however, have narrowed considerably over the past few sessions on expectations of tighter supply, but the upside is likely to be limited. The differentials were at a discount of $1.69 a barrel two weeks ago.
Jet cash differentials also widened their discounts to 29 cents a barrel to Singapore quotes on Tuesday, compared with Monday’s discount of 20 cents a barrel.
The February crack has dropped to $ 12.70 /bbl with the 10 ppm crack at $13.65 /bbl. The regrade has dropped to $ 0.35 /bbl.
The March crack is $ 13.50 /bbl with the 10 ppm crack at $14.45 /bbl. The regrade is at $ 0.15 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s cash premiums for 380-cst high-sulphur fuel oil fell on Tuesday to their lowest in about eight months, hurt by weaker buying interest, while the prompt-month time-spread narrowed.
Cash premiums for 380-cst high-sulphur fuel oil were at $2.62 a barrel to Singapore quotes, a level not seen since June last year. They were at a premium of $2.96 per barrel a day earlier.
The Feb/March 380-cst time-spread was trading at about $3 a tonne on Tuesday, its lowest in two weeks. The spread was at $3.75 a tonne on Monday.
The more actively traded prompt-month 380-cst barge crack to Brent crude edged higher to minus $2.57 a barrel, from minus $2.62 on Monday. Refining margins for fuel oil are hovering near their highest levels in about three years.
The February 180 cst crack has improved to $ 1.65 / bbl with the visco spread at $ 0.55 /bbl.
The March180 cst crack is at $ 1.50 / 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.