Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil bulls are discovering that the Russia-OPEC driven crude rally isn’t immune after all to talk of a U.S. recession. Crude prices ended up mixed with Brent in the red even as WTI finished higher.

Brent crude futures settled down 6 cents, or 0.01%, at $107.45 a barrel after rallying by more than $1 earlier.

WTI crude futures settled up 42 cents, or 0.4%, at $106.13 after falling as much as $3 earlier in the session.

Soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of the year and into 2023, the International Energy Agency cautioned on Thursday.

OPEC cut its forecast for growth in world oil demand in 2022 for a second straight month by 310 kbd to 3.36 mbd. They cited the impact of Russia’s invasion of Ukraine, rising inflation and the resurgence of the Omicron coronavirus variant in China.

More broadly, oil prices and financial markets have been under pressure this week amid jitters over rising interest rates, the strongest U.S. dollar in two decades, concerns over inflation and possible recession.

“The trading has been thin and nobody knows what’s going to move the needle,” said John Kilduff, partner at Again Capital LLC in New York.

At a global level, the death toll from the COVID-19 virus rose to 6.28 Million (+1,961 DoD) yesterday. The total number of active cases rose by 40,000 DoD to 38.96 million. (Click here for details).

 Asia’s naphtha crack eased to $121.45 a tonne, from $123.55 in the previous session.

The June crack is lower at -$ 1.25 per barrel 

Asia’s Gasoline crack rose to $27.27 a barrel from $25.62 in the previous session. A drop in crude oil benchmarks also supported margins.

Singapore’s onshore inventories of light distillates fell 257,000 barrels to a two-week low of 14.559 million barrels in the week to May 11, Enterprise Singapore data showed.

The June crack is higher at $30.10 per barrel.

Click Here for a graphical depiction of Global Gasoline stocks by region.

Asia’s cash premiums for 10 ppm gasoil dipped on Thursday, hurt by muted cargo demand in the physical trade window, while middle distillate inventories in Singapore climbed to a three-week high.

Cash differentials for gasoil with 10 ppm sulphur content were at a premium of $7.46 a barrel to Singapore quotes, compared with $7.68 per barrel a day earlier.

The front-month regrade, the price spread between jet and gasoil, stood at minus $4.30 a barrel on Thursday, compared with minus $3.55 per barrel a day earlier. The regrade has climbed about 47% in the last two weeks.

The May/June time spread for the benchmark gasoil grade in Singapore, which has narrowed by about 15% in the last week, remained unchanged at $8 a barrel on Thursday.

Refining margins or cracks for 10 ppm gasoil slipped to $40.05 a barrel over Dubai crude during Asian trading hours, compared with $42.71 a barrel in the previous session.

Singapore’s middle distillate inventories rose 22.6% to 7.4 million barrels in the week to May 11, according to Enterprise Singapore data. This week’s onshore stocks, however, were about 47% lower compared with the corresponding week a year earlier.

The June crack for 500 ppm Gasoil is lower at $38.20 /bbl with the 10 ppm crack at $40.20 /bbl. The regrade is at -$5.35 /bbl.

Click Here for a graphical depiction of Global Distillate stocks by region.

Asia’s front-month crack for 0.5% very low-sulphur fuel oil (VLSFO) climbed to its highest in a week on Thursday, supported by tight regional supplies. The VLSFO crack for June climbed to $21.72 barrel against Dubai crude during Asian trading hours, the highest since May 5. The crack was at $21.16 per barrel on Wednesday.

Cash premiums for Asia’s 0.5% VLSFO rose to $18.10 a tonne to Singapore quotes, compared with $17.83 per tonne a day earlier.

Meanwhile, Asia’s cash premiums for 380-cst high sulphur fuel oil (HSFO) were at $6.29 per tonne to Singapore quotes, as against a premium of $6.91 per tonne on Wednesday.

The cash premiums for 180-cst HSFO were at a premium of $21.19 per tonne to Singapore quotes on Thursday, 15 cents higher from the previous session.

Singapore’s onshore fuel oil stocks fell 15% to 17.5 million barrels, or about 2.6 million tonnes, in the week to May 11, the lowest level since July 2019, according to the Enterprise Singapore data. The onshore fuel oil inventories were 33.8% lower compared with the level a year-ago.

The June crack for 180 cst FO is higher at – $3.20 /bbl with the visco spread at $4.80 /bbl.

Click Here for a graphical depiction of Fuel Oil stocks by region.

We will hedge the June 92 Unleaded-Dubai crack at current levels of $30.10 / bbl. We will also hedge the 10 ppm Gasoil-Dubai crack for Cal 23 at current levels of $ 20.70 / bbl.

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.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

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