Crude Oil
Oil futures rallied about 2 percent on Wednesday as U.S. crude inventories unexpectedly fell. Brent crude futures rose 88 cents to settle at $67.55 a barrel. WTI crude futures rose $1.32 to settle at $58.26 a barrel.
Both benchmarks settled at their highest levels since mid-November.
Prices were also boosted by the EIA reducing the forecast levels of crude oil supply growth.
Exports from Venezuela’s main oil terminal have been stranded as its worst blackout on record has left parts of the country without power for roughly a week. The terminal resumed operations by Wednesday, but shipments have not started up. Power has been restored to many parts of the country in recent days.
The DOE data was more or less in line with the API data and, therefore, against market expectations.
U.S. crude stocks fell by 3.9 million barrels in the last week, compared with analysts’ expectations for an increase of 2.7 million barrels. While that is mildly bullish, what stoked fires was the drop in production to 12.0 mb/d from 12.1 mb/d for the past two weeks suggesting that production growth may be slowing down.
The material balance statement does not show anything particularly out of the ordinary. While the draws appear to be more than what it predicts, it seems to be more or less within a reasonable range of difference.
Naphtha
Asia’s naphtha crack was near a two-week high of $52.40 a tonne on Wednesday, supported by demand from petrochemical makers.
South Korea’s SK Energy, Lotte Chem and Malaysia-based Titan were looking to replenish stocks. Lotte Chem bought three cargoes of naphtha totaling 75 KT for second-half April delivery at premiums of about $3.50 a tonne to Japan quotes on a CFR basis . This was lower versus around $5 a tonne premium Lotte Chem had paid in late February for cargoes scheduled for first-half April delivery.
The March crack is higher at -$ 6.20 /bbl. The April crack is at -$ 6.30 /bbl
Gasoline
Asia’s gasoline crack eased 11 cents from a five-month high in the previous session to $5.77 a barrel on Wednesday. Light distillate stocks in Fujairah dropped by close to 600 KB to 10.4 million barrels. Stocks are still 50% higher than last year’s levels though.
The March crack is higher at $ 5.30 /bbl. The April crack is at $ 4.70 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil widened by a cent to 3 cents a barrel to Singapore quotes.
Cash differentials for jet fuel were at a discount of 30 cents a barrel to Singapore quotes compared with a discount of 25 cents a barrel on Tuesday.
Jet fuel cracks have shed about 9 percent in the last one week, and are currently about 7 percent weaker than this time last year. The margins have lacked the usual boost from seasonal heating demand this year due to a warmer winter, adding that upcoming summer travelling demand would likely offer support to the aviation fuel in the next few months.
Middle distillate stocks in Fujairah rose by over 600 KB to 2.6 million barrels. Stocks are now around 28% higher than previous year levels.
The March crack has dropped to $ 12.25 /bbl with the 10 ppm crack at $13.25 /bbl. The regrade is steady at – $ 0.65 /bbl.
The April crack is at $ 12.65 /bbl with the 10 ppm crack at $13.60 /bbl. The regrade is at – $ 0.25 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for Asia’s 380-cst high sulphur fuel oil dropped to a near-two week low on Wednesday as suppliers accepted lower premiums for cargoes of the fuel in the Singapore trading window.
380-cst cash premiums fell by $1.02 per tonne on Wednesday to $1.72 a tonne to Singapore quotes, its lowest since Feb. 28. Cash premiums were weighed down by a lower demand outlook for bunker fuel in Singapore.
Heavy distillate stocks in Fujairah rose very marginally to 8.6 million barrels. Stocks are currently around 18% higher than previous year levels
The March 180 cst crack is lower at $ 0.65 / bbl with the visco spread at 80 cents/bbl.
The April 180 cst crack is at $ 0.60 / bbl with the visco spread at 85 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.