Oil prices retraced on Monday as investor concerns about escalating tensions in the Middle East waned. Brent crude futures settled $ 1.16 lower at $71.42 /bbl. U.S. WTI crude futures also eased $ 1.17 to settle at $66.32/bbl.
While hedge funds have built a near record position in Crude oil and refined products, the buying seems to be increasingly concentrated in Brent, reports John Kemp from Reuters. While the net long position in the six most important contracts has increased to 1.365 billion barrels, only 118 million barrels lower than the record high set on Jan 23, While net length in Brent Crude has risen by 48 million Barrels since then, net length in WTI has actually decreased by 3 million barrels. One possible reason for this switch could be the higher backwardation in Brent which makes rollover a bit more profitable.
Asia’s naphtha crack dropped to a near two month low of $ 71.10 /MT. as demand for physical cargoes was muted in the wake of upcoming turnarounds in the region.
The May crack has fallen further to -$ 1.60 /bbl
Asia’s gasoline crack to Brent slid even further to $6.13 /bbl. The sector has been continuously hurt by high levels of inventory in both Asia and Europe. It is not clear how long the gasoline market will stay in contango particularly given that the IEA stated that new refining capacity will outstrip demand growth for gasoline.
The May crack is lower at $ 10.40 /bbl
Asia’s jet fuel cash premiums dipped on Monday on concerns that the aviation fuel market may lose steam over the next couple of months, and upcoming summer demand will not provide as firm a support as expected. Cash differentials for jet fuel fell to 99 cents a barrel to Singapore quotes on Monday, from $1.02 on Friday. Summer travelling demand for jet fuel may not be as robust as the winter heating demand for kerosene this year, and the market might not sustain its strength beyond May.
Meanwhile, cash premiums for 10ppm gasoil inched up to 26 cents a barrel to Singapore quotes, compared with 22 cents on Friday. However, Chinese diesel shipments headed for the West are weighing on market sentiment, traders said, as that indicates that the region has too much diesel stock.
The May gasoil crack is slightly lower at $ 14.85 /bbl with the 10 ppm crack at $ 15.55 /bbl. The regrade has gone still higher to $ 1.55 /bbl.
The prompt-month fuel oil crack to Brent crude firmed on Monday on falling crude prices. The May barges 380-cst fuel oil crack to Brent crude narrowed its discount to about $12.25 a barrel on Monday when Brent was nearly 1.75 percent lower from its previous session at about $71.31 a barrel.
The May 180 cst crack has improved to -$ 5.70/ bbl. with the visco spread slightly wider $ 1.50 /bb
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 pushed past $1.50 and, as stated yesterday, 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.