Crude Oil
Oil prices edged higher on Tuesday, but were unable to sustain the highs of the day. Brent crude futures rose 9 cents to settle at $66.67 a barrel. WTI crude futures rose 8 cents to settle at $56.79 a barrel.
During the day, prices spiked in reaction to Saudi Arabia’s plans to cut its crude oil exports next month to below 7 mb/d, while keeping its output well below 10 mb/d.
In the United States, domestic crude production is expected to grow more slowly than previously anticipated in 2019, averaging about 12.3 million bpd, the U.S. Energy Information Administration (EIA) said. However, the EIA cut its 2019 world oil demand growth forecast by 40,000 bpd to 1.45 million bpd.
The United States and China may be in the final weeks of discussions to hammer out a deal to ease their tit-for-tat tariffs dispute, U.S. Trade Representative Robert Lighthizer said on Tuesday.
Venezuelan congress head Juan Guaido is preparing a groundbreaking reversal of late President Hugo Chavez’s energy industry nationalization, allowing private companies a bigger role in its oilfields and shrinking state-run PDVSA, according to opposition advisers.
API Data
U.S. crude inventories fell by 2.6 million barrels in the week to March 8 to 449 million, data published by API showed on Tuesday. Analysts had expected an increase of 2.7 million barrels. Gasoline stocks also drew by a large 5.8 million barrels. Distillate stocks however, reported a small build
The official U.S. government report on crude stockpiles will be released on Wednesday.
Naphtha
Asian’s naphtha crack eased to a two-session low of $48.60 a tonne.
The March crack is lower at -$ 6.60 /bbl. The April crack is at -$ 6.55 /bbl
Gasoline
Asia’s gasoline crack rose for the third straight session to hit a five-month high of $5.88 a barrel on Tuesday, supported by firm demand and tightening supplies.
Some of the gasoline and gasoline blending components sourced from different parts of Asia but stored in South Korean storage terminals were being moved to South America. This was in spite of supply tightness in Asia which resulted in Taiwan’s CPC fetching a comparatively high premium of over $2 a barrel to Singapore quotes for cargo scheduled for April loading FOB Taiwan.
The March crack is higher at $ 5.05 /bbl. The April crack is at $ 4.35 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil remained unchanged at 2 cents a barrel to Singapore quotes. Cash differentials for the benchmark gasoil grade, which have stayed at discounts since November, have steadily firmed, especially over the last week amid an uptick in demand for physical cargoes, while seasonal maintenance at some regional refineries were curbing supplies.
Cash discounts for jet fuel widened to 25 cents a barrel to Singapore quotes, compared with a discount of 14 cents a barrel on Monday.
The March crack has dropped to $ 13.00 /bbl with the 10 ppm crack at $14.00 /bbl. The regrade is steady at – $ 0.65 /bbl.
The April crack is at $ 13.30 /bbl with the 10 ppm crack at $14.25 /bbl. The regrade is at – $ 0.10 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Prices in Asia’s fuel oil market were largely steady on Tuesday with the front-month 380-cst time spread nudging to a four session high of $3.75 per tonne on expectations of fewer supplies in April.
Western arbitrage flows into Singapore in April are expected to be slightly lower than in March when more than 4 million tonnes were shipped in.
Meanwhile, 380-cst cash premiums gave back the previous session’s gains, retreating to $2.74 a tonne to Singapore quotes with lower deal values in the Singapore physical trading window on Tuesday.
The March 180 cst crack is lower at $ 1.20 / bbl with the visco spread at 80 cents/bbl.
The April 180 cst crack is at $ 1.10 / bbl with the visco spread at 80 cents/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh hedges to consider today. If FO cracks stay strong, 3Q19 cracks may be worth hedging.
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.