Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices settled slightly mixed on Thursday after trading in a narrow range as the market weighed mixed U.S. economic signals and prospects for a Chinese demand recovery with a build in U.S. crude stockpiles.

London-traded Brent crude for March delivery closed higher, settling up 24 cents, or 0.3%, at $85.15. The intraday bottom for Brent was $83.88.

New York-traded WTI crude for March delivery settled down just 10 cents, or 0.1%, at $78.49 per barrel, recovering from a session low of $77.92.

Crude prices treaded water for a second day in a row as bulls in the space tried to push the market into higher territory on projected demand from China, the world’s largest oil importer. The dollar’s surge to a six-week peak against a basket of currencies was also weathered by oil bulls despite the higher costs it brought to those buying crude to support it from the lows.

The prospect of a Chinese demand recovery has contributed to bullish sentiment. On the supply side, Saudi Energy Minister Prince Abdulaziz bin Salman said the current OPEC+ deal to cut oil production targets by 2 million barrels per day (bpd) would be locked in until the end of the year, adding he remained cautious on Chinese demand.

While U.S. data suggested the U.S. jobs market remained robust, a gauge of manufacturing data in the mid-Atlantic region unexpectedly plunged.

Federal Reserve Bank of Cleveland President Loretta Mester said the central bank could become more aggressive with rate rises if inflation surprises to the upside. The latest reading on inflation showed prices remaining stubbornly high. But Mester does not expect the U.S. to fall into recession.

Asia’s naphtha refining profit margin fell as Singapore stocks logged a big build. The crack slipped by $7.83 to $90.93 a tonne.

In the naphtha markets, tight supplies from the West continued cushion a big fall in prices. 

“Modest price upside for Asian naphtha relative to firmer European naphtha will keep the east–west spread between $0 and $5 per tonne through at least the second quarter this year, well below workable arbitrage values,” Energy Aspects analysts said in a note.

The March crack is higher at -$3.10 per barrel

Asian Gasoline margins for 92 RON gasoline slipped by 46 cents to $11.84 a barrel on Thursday.

A larger than expected increase in U.S. stocks added further pressure to the gasoline complex, though optimism around a China fuel demand recovery limited the downside.

Singapore inventories of lights distillates climbed to a more than six-month high of 17.582 million barrels in the week ended Feb. 15, Enterprise Singapore data showed.

The March crack is lower at $12.75 per barrel.

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

Asia’s 10 ppm sulphur gasoil margins and cash premiums fell on Thursday amid ample supply in the regional market.

Gasoil cash differentials closed at $1.29 a barreldown by 31 cents day-on-day.

Refining margins for 10 ppm sulphur gasoil closed higher at $24.52 a barrel, compared with $26.91 a barrel previously.

Jet fuel refining margins also weakened from the previous day at $22.21 per barrel.

India has cut its windfall tax on crude oil and exports of aviation turbine fuel and diesel, according to a government notification dated Feb. 15.

Singapore middle distillates stocks held by up to 14 major oil and oil storage companies rose to a two-week high of 7.685 million barrels as of Feb. 15, according to data released on Thursday by Enterprise Singapore.

The March crack for 10 ppm Gasoil is lower at $23.50 /bbl. The 10 ppm regrade is at -$2.40 /bbl.

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

Asia’s spot cash premium for very low sulphur fuel oil (VLSFO) reverted to a softer trend on Thursday, giving up the previous day’s gains as supplies remain ample.

The 0.5% VLSFO cash differential fell to a premium of $14.94 a tonne.

The  wider supply pool was unlikely to tighten into March. Total fuel oil supplies to Asia are estimated at above 5.5 million tonnes in February, higher from January, based on Refinitiv assessments this week.

The March crack for 180 cst FO is higher at – $15.35 /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

Leave a Comment