Oil futures inched up on Wednesday as the prospect of mounting tensions in the Middle East hitting global supplies overshadowed an unexpected build in U.S. crude inventories. Brent crude settled at $71.77 a barrel, gaining 53 cents. WTI crude futures settled at $62.02 a barrel, climbing 24 cents.
Investors chose to give more importance to the immediate tensions going on in the Middle East and stay long rather than react to the implication of the crude build coupled with the failure of the trade talks.
Markets were also boosted by the fact that the crude build was less thann that reported by the API
The IEA lowered its forecast for 2019 growth in global oil demand by 90 kbpd to 1.3 million bpd.. It also said the world would require very little extra oil from OPEC.
U.S. crude inventories rose unexpectedly last week to their highest levels since September 2017. This build was reported notwithstanding an increase in run rates and a huge increase in exports. However, it was smaller than the nearly 9 million-barrel build estimate on Tuesday by the API. The crude build is totally at odds with our material balance statement which suggests a 3 million barrel draw. Hence we would not be surprised to see a significant draw next week.
The drawdown in gasoline stocks also helped oil futures, with U.S. gasoline futures gaining about 2%. Thiss draw has ocurred notwithstanding a significant drop of 725 kbpd in gasoline demand. The build in distillate stocks will go towards building some cusion for stocks as demand will increase in the last quarter of the year.
Asia’s naphtha crack edged up 30 cents to $34.20 a tonne on Wednesday, after sinking to a three-month low in the previous session, but the current value still reflected a weak market.
The average crack this year up to May 15 close is $50, down 40% from a year-ago period as higher supplies are expected. Reasons behind the ample supplies included weaker demand due to cracker maintenance season, recent petrochemical unit outage in Japan and high volumes of western cargoes from Europe and the Mediterranean flowing into Asia. The monthly average of western cargoes arriving in Asia for January to May at 1.7 million tonnes are up 8% from the same period last year.
The May crack is higher at – $ 7.65 /bbl. The June crack is at – $6.45 /bb;
No fresh news on the gasoline markets. Gasoline stocks in Fujairah dropped by 314 kb to 10.46 million barrels
The May crack is higher at $ 4.90 / bbl. The June crack is at 5.50 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s regrade, or jet fuel prices compared to gasoil, was at its lowest in a week, as high supplies and slow demand for air travel dragged on jet fuel.
Asia’s jet fuel prices ended at 22 cents lower than gasoil compared to 14 cents lower in the previous session. Weakening global trade, coupled with growing trade tensions and shrinking order books continued to have an impact on air freight demand.
Weak jet fuel demand was particularly evident in the Middle East, with consulting firm FGE highlighting that March data had showed a year-on-year contraction in Middle East air passenger kilometres. The aviation sector has been a big contributor to oil demand in the Middle East, with jet fuel consumption having doubled since 2007 to some 430,000 barrels per day.
Distillate stocks in Fujairah fell by 306 kb to 2.28 million barrels..
The May crack for 500 ppm Gasoil is higher at $ 13.05 /bbl with the 10 ppm crack at 13.70 / bbl. The regrade has stayed at -$ 0.45 /bbl
The June crack for 500 ppm Gasoil is at $ 14.50 /bbl with the 10 ppm crack at 15.15 / bbl. The regrade is at -$ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
The front-month 380-cst high-sulphur fuel oil (HSFO) barge crack discount to Brent crude extended losses on Wednesday, falling for a fourth consecutive session, to its widest discount in more than seven months as ample prompt supply and sluggish demand weighed.
The June 380-cst barge crack was at minus $9.68 a barrel to Brent crude, down from minus $9 a barrel in the previous session and its widest since October 5.
The May 180 cst crack is higher at – $ 5.25 / bbl with the visco spread at $ 2.05 /bbl.
The June180 cst crack is at – $ 4.15 / bbl with the visco spread at $ 1.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Nothing fresh to report today. Gasoil cracks are rising in the prompt and may be hedgeable soon.
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.
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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.