Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices fell over 2% in volatile trading on Monday as the collapse of Silicon Valley Bank roiled equities markets and raised fears of a fresh financial crisis, but a recovery in Chinese demand provided support.

London-traded Brent crude for April delivery settled down $2.01, or 2.4%, to $80.77. The global benchmark earlier fell to a session low of $78.34, its lowest price since early January.

WTI Crude for April delivery settled down $1.88, or 2.4%, at $74.80 a barrel. It earlier sank 4% to reach $72.33. Its low prior to that was $70.25, reached on Dec. 12.

Crude prices tumbled as much as 4% Monday before settling down more than 2% despite financial regulators saying they have acted to contain fallout from the collapse of Silicon Valley Bank, one of the country’s top 20 lenders. The Biden administration also has assured there won’t be a relapse of the financial crisis from 15 years ago.

Crude oil production in the seven biggest U.S. shale basins is expected to rise in April to its highest since December 2019, the Energy Information Administration said.

The share of African crude oil in India’s total crude imports in February dropped to its lowest level in at least 22 years as refiners took record volume of discounted Russian oil and raised purchases from Middle Eastern producers under annual deals, shipping data obtained from sources show.

Asia’s naphtha refining profit plunged to its lowest level since Feb. 1 on Monday, mirroring the downtrend in Northwest Europe cracks, and a slight recovery in crude oil benchmarks also weighed on the cracks.

The naphtha crack slipped to $76.93 a tonne, compared with $87.15 a tonne on Friday.

The April crack is lower at -$5.75 per barrel

Asia’s gasoline crack also declined 48 cents to $12.24 per barrel.

The April crack is higher at $14.65 per barrel.

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

Asia’s 10-ppm sulphur gasoil margins snapped a five-day losing streak on Monday and surged by around 11% to $24.94 a barrel amid volatile oil futures and some swaps buying. Stronger buying interest in the swaps market was the key supporting factor.

Cash differentials for 10 ppm sulphur gasoil firmed slightly to a premium of 58 cents per barrel, but a buy-sell gap hindered trades.

Jet fuel refining margins went up by a slower pace once again, resulting in regrade hitting a three-month low at a discount of $3 per barrel.

The April crack for 10 ppm Gasoil is higher at $25.05 /bbl. The 10 ppm regrade is at -$3.00 /bbl.

 

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

Spot fuel oil premiums for high sulphur fuel oil (HSFO) declined on Monday, although a flurry of trades at the Singapore window kept the downside limited.

The 180-cst HSFO cash differential dipped to $3.23 a tonne, while the 380-cst HSFO cash differential fell to $7.35 a tonne.

According to FGE estimates, the Singapore Hi-5 (VLSFO-HSFO) spread is expected to widen in April as very low sulphur fuel oil (VLSFO) cracks rebound on lower inflows from the West, while the strength in HSFO cracks should wane with higher availability in the region..

The April crack for 180 cst FO is lower at – $12.45 /bbl with the visco spread at $1.85 /bbl.

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

We shall add 92 Unleaded Dubai crack for 2Q23 at current levels of $13.20 per barrel. We shall also add Gasoil 10ppm Dubai for 2Q23 at current levels of $23.50 per barrel.

 

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

Leave a Comment