Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Stickier-than-expected U.S. inflation and news that the Biden administration plans to sell another 26 million barrels from an unused allocation of the country’s emergency oil reserve brought the week-long rally in crude to a pause on Tuesday.

London-traded Brent crude for March delivery was down $1.03, or 1.2%, at $85.58. The global crude benchmark hit an intraday bottom of $84.14 after a two-week peak of $86.93 on Monday.

New York-traded WTI crude for March delivery settled down $1.08, or 1.4%, at $79.06 per barrel. The U.S. crude benchmark hit a session low of $77.48 after a two-week high of $80.61 in the previous session.

The Biden administration said it would be selling 26 million barrels of crude oil from the Strategic Petroleum Reserve, a release that had been mandated by Congress in previous years.

Oil prices pared losses after the Organization of the Petroleum Exporting Countries raised its 2023 oil demand forecast by 100,000 barrels per day in a monthly report, citing the reopening of the Chinese economy after COVID restrictions.

Seaborne supplies of Urals crude bound for China in January rose to about 230,000 barrels per day (bpd), the highest level since June 2022, as demand for the grade from the world’s largest oil importer shows early signs of rebound, traders said and Refinitiv Eikon data showed.

The Consumer Price Index for All Urban Consumers, known in short as the CPI, rose 6.4% in the 12 months to January, marking the smallest inflationary growth since October 2021. But a larger rise on the month raised questions on how comfortable the Federal Reserve would be in continuing to taper rate hikes.


The data reported by the API was bearish across the board. Cushing also reported a build of over 1 million barrels. The market awaits official data later today.

Asia’s naphtha refining profit margin climbed to a one-week high on Tuesday amid a weakness in Brent crude benchmarks. The crack jumped to $92.40 a tonne, the highest since Feb. 6, compared with $88.88 a tonne in the previous session. The backwardation in naphtha markets narrowed to $8.50 per tonne from $12 a day earlier.

The March crack is higher at -$4.20 per barrel

Gasoline markets softened by $1.28 to $12.42 a barrel on Tuesday.

The March crack is lower at $14.35 per barrel.

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

Asia’s 10-ppm sulphur gasoil differentials dipped yesterday as selling persisted..

Gasoil cash differentials went down 19 cents to $1.24 per barrel on Tuesday.

Refining margins for 10 ppm sulphur gasoil jumped to $25.25 per barrel bolstered by the drop in crude oil prices.

Jet fuel refining margins also widened to $23.40 per barrel.

The March crack for 10 ppm Gasoil is higher at $26.25 /bbl. The 10 ppm regrade is at -$1.65 /bbl.

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

The spot cash premium for very low sulphur fuel oil (VLSFO) in Asia fell for a third consecutive session as more supplies are set to hit the East in the coming weeks. Total fuel oil supplies into Asia are expected to breach 5.5 million tonnes for February, latest assessments by Refinitiv Oil Research showed on Tuesday. This compared higher from January, led by an uptick in both Western and Middle Eastern supplies.

The 0.5% VLSFO cash differential declined to a premium of $17 a tonne on Tuesday, nearing a four-week low.

The market’s front-month refining margin also fell at the Asia close (0830 GMT) on Tuesday, at a premium of $11.64 a barrel.

The March crack for 180 cst FO is higher at – $17.90 /bbl with the visco spread at $1.80 /bbl.

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

No fresh trades for today. However, we may hedge more gasoline should gasoline Q2 crack rise above $14.00 / 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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