Oil prices surged almost 5% on Wednesday, after a report from the International Energy Agency, followed by U.S. inventory data boosted optimism about returning demand after the coronavirus lockdowns last year crushed fuel consumption.
Brent crude futures rose $2.91, or 4.6%, to settle at $66.58 a barrel. U.S. West Texas Intermediate (WTI) crude ended $2.97, or 4.9%, higher at $63.15 a barrel.
Vaccine rollouts are brightening the outlook for global oil demand, the IEA said on Wednesday, though rising cases in some major oil-consuming countries show a recovery may be fragile.
The DOE data reported a strong draw in crude and distillates with a mild build in gasoline. Refining runs rose by a full percentage point to 85%. Gasoline demand was also strong at over 8.9 mbpd. This fueled the rally caused by the supportive IEA report. However, there still remain a few questions posed by our material balance report.
The increase in refining runs does not seem to have been accompanied by an increase in crude consumption. Which would lead to suggest a sizeable build in crude stocks instead of the other way around. The decrease in gasoline imports would suggest that a draw should have been seen rather than the minor build that was reported. The distillate draw seems to be under reported to a similar extent.
At a global level, the death toll from the COVID-19 virus rose to 2,984,920 (+13,532 DoD) yesterday. The total number of active cases rose by around 220,000 DoD to 24.23 million. (Click here for details)
Asia’s naphtha crack edged higher on Wednesday, halting a four-session losing streak that had sent the refining margin to a near four-month low.
The naphtha crack climbed to $87.88 a tonne, up from $86.18 a tonne on Tuesday.
Total naphtha flows into Asia for April have been provisionally assessed at 5.3 million tonnes to 5.4 million tonnes, assessments by Refinitiv Oil Research showed.
The May crack has plummeted to -$ 0.25 /bbl
Asia’s gasoline crack was also higher on Wednesday, up 11 cents from the previous session to $6.53 a barrel, supported by signs of improved demand and refinery maintenance in North Asia.
However, signs of rising supplies as some refiners increase output amid improved refining margins and a spike in coronavirus cases in some Asian countries, including Thailand and India, may cap gains.
Light distillate stocks in Fujairah dipped by 200 KB (3.2%) to 6.01 million barrels, data via S&P Global-Platts showed.
The May crack is higher at $9.00 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for 10 ppm gasoil dropped 3 cents on Tuesday to a discount of 15 cents per barrel.
Cash discounts for jet fuel were at 62 cents per barrel to Singapore quotes on Wednesday, compared with a discount of 59 cents per barrel on the previous day.
Middle distillate stocks in Fujairah dropped 266 KB (7.9%) to 3.08 million barrels, data via S&P Global-Platts showed.
The May crack for 500 ppm Gasoil is higher at $5.60 /bbl with the 10 ppm crack at $ 6.60 /bbl. The regrade is at -$ 0.80 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month 0.5% very low-sulphur fuel oil (VLSFO) refining margin firmed on Wednesday, climbing to a more than one-month high of $13.76 a barrel above Dubai crude, despite rising crude prices.
The VLSFO cash premium also firmed to a one-month high of $1.25 a tonne to Singapore quotes as deal activity in the Singapore trading window resumed.
Fuel Oil stocks in Fujairah dropped 10.9% to 9.99 million barrels, data via S&P Global-Platts showed.
The May crack for 180 cst FO is higher at -$3.40 /bbl with the visco spread at $0.95 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No fresh action 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 refinery.
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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.