Crude Oil prices tallied their best weekly performance in 8 months driven by fears of a US led military conflict in Syria. Brent crude futures added 56 cents to settle at $72.58 /bbl. U.S. WTI crude futures rose 32 cents to end the week at $67.39/bbl.
For the week, WTI gained about 8.6%, the strongest weekly percentage performance since late July of last year, while Brent saw a weekly increase of 8.2%.
This morning though, in the wake of the co-ordinated attack on Syria, oil prices are significantly lower as the impact of the same appears to be compact and over.
Over the weekend, the IEA said that OPEC could be just weeks away from “mission accomplished”. OECD stocks fell by a larger-than-expected 25.6 million bbl in February to within a 10% surplus of the five year average. In its monthly oil report, the agency also kept demand growth forecast unchanged at +1.48 mbd for 2018. Growth continues to be seen throughout all regions except OECD Asia/Oceania (-55 kb/d). Supply is expected to grow 1.79 mb/d this year, led by North America, although IEA has taken down forecasts for North America by 44 kb/d since last month’s report.
In the meanwhile, Baker Hughes, in its weekly report on active oil rigs, reported an increase of 7 rigs taking the total count to 815
16 April 2018
New Rally High…………
Brent closed the week at a new rally high of 72.58, above the Jan’18 swing high of 71.28. Notably, Brent is now at the highest levels seen since Dec 2014. With a high at 73.09, the Long-Term Bull Targets of 72.75, recommended in the first report in this column has been achieved.
A few technical events are worth mentioning.
- Last week, we mentioned the Weekly Evening Star- a bearish reversal pattern – and that we don’t have much faith in it. The action in Week ended 13/4 completely negates this pattern.
- We has also said we should be trading with the larger bullishness and use the 66-67 region to ‘accumulate’ the dip. This did not work as expected with weekly lows not breaking lower into the range.
- Also, not only did Brent not get lower than the previous weekly low, it also saw a high momentum upmove, leaving ‘accumulators’ with a lower position size.
We see the current momentum carrying further to target the 75-76 area this month. The larger strategy remains to Buy and add on dips. We could be seeing some cooling-off with the immediate Long Term supports in the 69-70 range. (Marked by the Blue horizontal line in monthly chart marking the Dec 2014 high, that has just been overhauled.)
We should get further confirmation for Long-Term strength with a close this month above 71.28
Supports and Resistances
Short Term Supports come from the late Mar’18 swing high of 71.03/bbl.
Immediate Resistance is from last week high of 73.09/bbl. For now, unless the long exits are stronger than expected, 71/bbl should be a good spot to Buy.
About the Analyst
Vignesh Eswar has been a Technical Analyst, Advisor, Trader, and Trainer with over 23 years experience in Indian markets.
Asia’s naphtha crack recovered slightly on Friday to settle at $ 80.35 /MT. Monthly import demand in Japan for March for instance was at a two-month high of nearly 1.3 million tonnes. This was also higher versus the same period last year, official data showed. But traders were not expecting the strong naphtha fundamentals to last as coming cracker maintenance in Taiwan and Japan would hurt demand.
The May crack has fallen further to -$ 1.40 /bbl
Asia’s gasoline crack to Brent extended losses on Friday, settling still lower at $6.28 /bbl. Inventories remained high despite gasoline stock levels falling from record high levels in Europe and Singapore.
The May crack is lower at $ 10.60 /bbl
Asia’s cash differentials for gasoil with 10ppm sulphur content dipped on Friday as concerns surrounding Chinese demand weighed on market sentiment. Cash premiums for 10ppm gasoil slipped to 22 cents a barrel to Singapore quotes, compared with 26 cents on Thursday.
China’s Unipec, the trading arm of Asia’s largest refiner Sinopec , is planning its third very large crude carrier (VLCC) shipment of diesel from China to Europe or West Africa. The first Unipec VLCC cargo that shipped late last year from Tianjin and Taiwan was sold to buyers in West Africa, the Amsterdam-Rotterdam-Antwerp region and New York Harbour.
The May gasoil crack is slightly lower at $ 15.00 /bbl with the 10 ppm crack at $ 15.70 /bbl. The regrade has jumped to $ 1.30 /bbl.
Sentiment in the 380-cst fuel oil market continued to show signs of improvement on Friday with the front-month 380-cst time spread widening its backwardation, and the May crack to Brent crude holding steady despite rising crude oil prices. However, the improved 380-cst market and weaker 180-cst prices weighed on the front-month viscosity spread on Friday despite Pakistan’s PSO this week announcing it would seek to import up to 865,000 tonnes of low-viscosity fuel oil in May and June. Singapore marine fuel sales in the first quarter climbed to a record high in 2018 despite lower volumes of year-on-year March sales,
The May 180 cst crack has improved to -$ 5.90/ bbl. with the visco spread narrowing further to $ 1.45 /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 refiner.
The May regrade has blown out a bit since we first entered our hedge. If it pushes past $1.50, we will hedge a bit more.
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.