Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil futures were flat to lower on Wednesday as the U.S. dollar strengthened and investors worried that rising interest rates would slow the economy and cut fuel demand. Oil’s losses, however, were limited as the market discounted a big build in U.S. crude stocks due to a data adjustment and as the International Energy Agency (IEA) forecast higher global oil demand growth.

London-traded Brent crude for March delivery declined just 20 cents, or 0.2%, at $85.38. The intraday bottom for Brent was $83.91.

New York-traded WTI crude for March delivery settled down just 47 cents, or 0.6%, at $78.59 per barrel, rebounding from a session low of $77.28.

In the oil bulls corner was longer-term demand for crude predicted by the Paris-based International Energy Agency. The so-called IEA raised its forecast for 2023 oil demand by 500,000 barrels per day to nearly 102M bpd. It also cautioned that producer alliance OPEC+ might try to squeeze output to keep crude prices supported.

DOE DATa

The huge build in crude stocks was apparently due to a stock adjustment and not due to the regular movements of crude. This is apparent in our material balance statement. It also lends credence to the requirement of existence of one. An adjustment to the extent of nearly 5% of stock levels is extremely high, to say the least.

As per the statement above, both crude and distillate stocks showed significant draws. The crude number appears to be largely due to a decrease in net imports of the order of 1 Million bpd. The distillate stocks have been impacted by both a drop in imports as well as an increase in demand.

Asia’s naphtha refining profit margin extended gains on Wednesday amid tight supplies as traders avoided Russian cargoes and shipments from the West declined, market participants said. The crack rose by $6.35 to $98.75 a tonne.

Western naphtha inflows are projected to fall for a second consecutive month to around 1.4 million tonnes in February, compared with about 1.8 million tonnes in the same period last year, assessments by Refinitiv Oil Research showed.

Light distillate stocks at the Fujairah trading hub declined to a two-week low of 7.184 million barrels in the week to Feb. 13, S&P Global Commodity Insights data showed.

The March crack is higher at -$3.65 per barrel

Asian Gasoline margins for 92 RON gasoline dipped by 12 cents to $12.30 a barrel on Wednseday.

The March 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 rose on Wednesday on weaker crude prices even as U.S. and Middle East inventory stockpiles posted weekly rises.

Gasoil cash differentials closed at $1.60 a barrelup by 36 cents day-on-day.

Refining margins for 10 ppm sulphur gasoil closed higher at $26.91 a barrel, compared with $25.25 a barrel previously.

Jet fuel refining margins edged higher from the previous day, at $25.01 per barrel.

Middle distillate stock levels at Fujairah Oil Industry Zone rose 98,000 barrels to 1.83 million barrels for the week ended Feb. 13, according to industry information service S&P Global Commodity Insights.

The March crack for 10 ppm Gasoil is lower at $24.25 /bbl. The 10 ppm regrade is at -$2.20 /bbl.

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

Asia’s very low sulphur fuel oil (VLSFO) market gained on Wednesday after inventories at the Fujairah hub declined.

The 0.5% VLSFO cash differential rose to a premium of $17.24 a tonne from $17 a day earlier.

The cash differential for 180-cst HSFO rose by $1.29 to a discount of $3.63 a tonne to Singapore quotes on Wednesday.

Fuel oil stocks at the Fujairah commercial hub declined for a fourth straight week to 8.158 million barrels in the week to Feb. 13, S&P Global Commodity Insights data showed.

The March crack for 180 cst FO is higher at – $16.70 /bbl with the visco spread at $2.20 /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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