Oil prices plunged by nearly 5% on Wednesday to settle at the lowest levels in more than a year on concerns that a crisis of confidence in the banking sector could trigger a recession and cut demand.
London-traded Brent crude settled settled at $73.69 per barrel, down $3.76, or 4.9%. It earlier hit an intraday low of $71.77, a bottom not seen since Dec. 21, when it plumbed $71.24. The global crude benchmark has lost 12% since the start of the week.
WTI Crude fell to as low as $65.70 a barrel, marking a bottom not seen since December 2, 2021 when it touched an intraday low of $62.43. It eventually settled Wednesday’s trade at $67.61, down $3.72 or 5.2%. With its drop of more than 6% in the previous two sessions, WTI’s losses on the week now amount to around 12%.
Crude recovered some of its earlier losses along with benchmark equity indexes after Swiss regulators pledged a liquidity lifeline to Credit Suisse, which had earlier seen shares fall as much as 30%.
Hedge funds were liquidating because of rising interest rates and economic uncertainty, said Dennis Kissler, senior vice president of trading at BOK Financial, adding that heavy selling pressure on U.S. stock markets on Wednesday was adding to the fund liquidation in crude.
Meanwhile, figures showed that China’s economic activity picked up in the first two months of 2023 after the end of strict COVID-19 containment measures.
Wednesday’s monthly report from the International Energy Agency flagged an expected boost to oil demand from China, a day after OPEC increased its Chinese demand forecast for 2023.
Crude stocks continued to build even as both gasoline and distillate stocks showed a significant draw. While our material balance statement shows a massive draw for crude as against the reported build, last week’s statement had done exactly the opposite.
The major factor in the determination appears to be the numbers for export. Last week, the number had plunged to 3.37 million barrels per day from the record 5.63 million barrels per day reported a week earlier. This week, exports have again been reported at 5.03 million barrels per day, thereby restoring some sort of parity.
However, gasoline demand and distillate demand, at 8.6 million barrels per day and 3.7 million barrels per day remain stubbornly low.
Asia’s naphtha refining profit margin jumped on Wednesday after inventories declined at Fujairah trading hub, a key supplier of naphtha to the region.
The crack climbed to $94.38 a tonne, compared with $86.65 a tonne a day earlier.
The April crack is lower at -$4.80 per barrel
Asia’s gasoline refining profit margin jumped by $1.73 per barrel to $14.05 a barrel.
Light distillate stocks at the Fujairah commercial hub declined to the lowest level since Dec. 19 at 6.736 million barrels in the week to March 13, S&P Global Commodity Insights data showed.
The April crack is lower at $15.80 per barrel.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s 10 ppm sulphur gasoil margins rebounded 4.4% day on day to $24.99 per barrel, almost erasing earlier week’s losses, as trading sentiment turned for the better amid a strong rebound in oil futures.
Cash differentials for 10 ppm sulphur gasoil went up to 75 cents per barrel as some traders continued their pursuit for end-March and April parcels.
Gains were capped after a portion of the market questioned the sustainability of a price rebound in the near-term amid persistently weak regional demand fundamentals.
Jet fuel margins firmed as well to $22.32 per barrel.
Middle distillates stockpiles at Fujairah Oil Industry Zone hit a six-week high of 2.521 million barrels for the week ended March 13, according to industry information service S&P Global Commodity Insights.
The April crack for 10 ppm Gasoil is lower at $23.95 /bbl. The 10 ppm regrade is at -$2.90 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s spot fuel oil premiums for high sulphur fuel oil (HSFO) advanced on Wednesday after stocks at Fujairah hub declined.
The 180-cst HSFO cash differential jumped by $1.48 to $5.66 a tonne, while the 380-cst HSFO cash differential rose to $7.04 a tonne.
Fuel oil stocks at the Fujairah trading hub dropped by 1.474 million barrels to a three-week low of 19.407 million barrels in the week to March 13, according to S&P Global Commodity Insights.
The April crack for 180 cst FO is higher at – $10.10 /bbl with the visco spread at $2.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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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.