Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices dropped over 4% to a three-month low on Tuesday after a U.S. inflation report and the recent U.S. bank failures sparked fears of a fresh financial crisis that could reduce future oil demand.

London-traded Brent crude settled down $3.32, or 4.1%, at $77.45. Like WTI, Brent hit a two-month low earlier in the session,  touching $77.05. The global crude benchmark has lost almost 7% since the start of the week, after accounting for the 2.4% slide in the previous session.

WTI Crude settled down $3.47, or 4.7%, at $71.33 per barrel, after a two-month low at $70.94. With Monday’s 2.4% on WTI, the U.S. crude benchmark has lost  more than 7% since this week began.

They were the lowest closes for both benchmarks since Dec. 9 and their biggest one-day percentage declines since early January. In addition, both contracts fell into technically oversold territory for the first time in weeks.

Data showed the U.S. Consumer Price Index (CPI) rose 0.4% in February from 0.5% in January. That slight slowdown in consumer price growth prompted investors to price in a smaller rate hike by the Fed in March. The Fed is now seen raising its benchmark rate by just a quarter of a percentage point next week, down from a previously expected 50-basis points, and delivering another hike of the same size in May. The Fed’s next two-day meeting starts next Tuesday.

api data

Notwithstanding the overall build in crude stocks, stocks in Cushing are reported to have drawn by 946 KB. The product draw, too, is quite substantial. As usual, we shall await official data today.

Asia’s naphtha refining profit margin rose on Tuesday, snapping a four-day losing streak, as crude oil benchmarks dropped by more than $1 on fears of a new financial crisis.

The crack rose by $9.73 to $86.65 a tonne over Brent crude oil, and the backwardation in naphtha markets stood at $18.50 per tonne.

The April crack is higher at -$4.45 per barrel

Asia’s gasoline refining profit margin weakened by 40 cents to $12.32 a barrel over Brent crude.

China’s gasoline exports were expected to be steady at between 300,000 tonnes and around 362,000 tonnes in March as domestic demand recovers, a Reuters survey showed. Last month’s survey showed gasoline exports were likely to fall to eight-year lows in February.

The April crack is higher at $16.25 per barrel.

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

Asia’s 10-ppm sulphur gasoil margins were mostly steady as stronger buying interest for physical cargoes cancelled out the impact of softer oil futures on Tuesday.

Cash differentials for 10 ppm sulphur gasoil went up to $0.72 a barrel, tracking an early April deal.

Gains in jet fuel refining margins were slower than gasoil, with the regrade widening again to a discount of $3.10 a barrel.

China’s diesel exports could fall to an eight-month low in March as refiners focus on meeting local demand and increasing domestic stockpiles ahead of planned overhauls at refineries, a Reuters survey showed.

The April crack for 10 ppm Gasoil is higher at $25.55 /bbl. The 10 ppm regrade is at -$2.95 /bbl.

 

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

Cash premiums for 180-cst high sulphur fuel oil (HSFO) rose on Tuesday amid weakness in crude oil prices on worries over a fresh financial crisis.

The 180-cst HSFO cash differential rose by 95 cents to $4.18 a tonne, while the 380-cst HSFO cash differential fell to $6.87 a tonne.

Singapore’s cash differential for 0.5% very low sulphur fuel oil (VLSFO) held steady at $4.02 a tonne on Tuesday.

The April crack for 180 cst FO is lower at – $11.60 /bbl with the visco spread at $1.85 /bbl.

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


Cracks appear to be at elevated levels following the plunge in crude oil prices. We shall add 92 Unleaded Dubai crack for 2Q23 at current levels of $15.15 per barrel. We shall also add Gasoil 10ppm Dubai for Cal 24 at current levels of $21.70 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.

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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.

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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