Crude Oil

Oil prices continued to zoom on Wednesday as the DOE reported draws across the board. Brent rose 85 cents to settle at $ 79.28 /bbl. West Texas Intermediate crude rose just 18 cents to settle at $ 71.49 /bbl.  

While domestic production has risen marginally, the Brent WTI spread has really blown out in the last week or so to just under $ 8.00 /bbl.

In other news, the IEA has revised global demand growth downwards by 38 kbd  to 1.44 mb / d. On the supply side, the IEA estmates the growth to be 1.87 mb/d an increase of 85 kb/d over last month.

In Venezuela, production plunged to 1.5 million barrels last month, its lowest level in decades due to its ongoing economic crisis.  

While crude prices continue to rise, spot crude oil cargo prices are at their steepest discounts to futures prices in years as sellers struggle to find buyers for West African, Russian and Kazakh cargoes, while pipeline bottlenecks trap supply in West Texas and Canada.

Meanwhile, the dollar  firmed to nearly a five-month high against a basket of other major currencies on Wednesday.

The DOE reported a draw of 1.4 million barrels of crude this week. While analysts expected a smaller draw, the API had reported a build. The DOE also reported a huge draw of 3.47 million barrels in gasoline stocks. Distillate stocks were more or less flat. 

While refinery runs increased to 91.1% the eye catching number was US crude exports which hit a record 2.56 million barrels per day. Indeed it is this phenomenal rise in exports that is helping the widening of the Brent – WTI spread.

Product demand for both gasoline and distillates decreased, the former dropping by nearly 250 kb/d. This is what makes the draw in gasoline stocks a bit surprising as can be seen from the material balance table below.

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


Asia’s naphtha intermonth premium spread eased 50 cents to $14 /MT on Wednesday, but this was still indicative of strong fundamentals versus three months ago when it was at $3.00/MT.

The June crack however continues to stay in negative territory although it has improved to – $ 0.05 / bbl


Asia’s gasoline crack surged to a 2-1/2-month high of $8.52 a barrel as summer demand could help soak up some of the excess supplies seen this year.

In the meanwhile, light distillate stocks in Fujairah increased by 127 kb to 7.07 million barrels.

The June crack has soared to $ 12.25 / bbl in keeping with this surge. 

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


Cash premiums for jet fuel  reached 30 cents a barrel to Singapore quotes, compared with 3 cents a barrel on Tuesday. Overall jet demand in the region looks relatively strong and the market will continue to remain in backwardation in the near term..

Cash differentials for gasoil with 10 ppm sulphur content  fell by a cent to 53 cents a barrel to Singapore quotes on Wednesday. The highest premiums this year have been 55 cents a barrel.

Middle distillates inventories in the Fujairah Oil Industry Zone (FOIZ) climbed by about 10 percent from a week earlier to 2.5 million barrels in the week ended May 14.

The June crack is stronger at $ 15.75 / bbl with the 10 ppm crack quoting at $ 16.35 /bbl. The regrade has dropped to $ 0.30 /bbl

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

Fuel Oil

Discounts for the front-month barges 380-cst fuel oil crack to Brent crude narrowed by nearly $1 on Wednesday amid active trade. The June 380-cst fuel oil crack to Brent crude was trading at a discount of about $11.65 a barrel, from about minus $12.35 a barrel in the previous session.

Fuel Oil Stocks in Fujairah dropped by 1.1 million barrels to 7.86 million tons.

The June 180 cst crack has improved to -$ 3.75 / bbl. The visco spread has increased to $ 1.75/bbl. 

Click Here for a graphical depiction of Fuel Oil stocks by region.

Hedge Recommendations

The June 180 cSt-Dubai crack has really strengthened over the past week improving by over $ 2/bbl. We will be monitoring this closely and would look to hedge should the crack get better than -$ 3.25 /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 refiner.

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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