Crude Oil
Crude prices declined slightly on Wednesday as U.S. government data showed inventories drew down less than an industry report had suggested on Tuesday. Brent crude futures dipped 10 cents to settle at $71.62 a barrel. WTI futures fell 29 cents to settle at $ 63.76 a barrel.
Brent crude rallied to its highest level this year early in the session, bolstered by an unexpected drop in U.S. crude inventories reported by the API as well as much better than expected GDP growth figures out of China.
However, the DOE data, on Wednesday showed about half the API’s reported decline. Gazprom Net said it expects the global oil deal to end in the first half of 2019 which served to further dampen bullish interest.
Refinery throughput in China – the world’s second-largest crude user – rose 3.2 percent in March from a year earlier.
As mentioned above, the draw in crude was about half the volume reported by the API. The same can be observed with the gasoline stocks. However, the DOE reported a small draw in distillate stocks.
Our Material balance statement, however, suggests that the draw in crude stocks is understated while gasoline stocks should have built substantially. The crude draw was a result of a huge drop in net imports. The product stocks were affected by a significant drop in product demand for both gasoline and distillates.
Naphtha
Asia’s naphtha crack edged up by 2.55 percent or $1.17 to a two-session high of $46.95 a tonne on Wednesday, but this was 14 percent lower than a month ago as ample supplies weighed.
The May crack has improved to – $ 5.70 /bbl
Gasoline
Asia’s gasoline crack, at $7.86 a barrel, 25.5 percent higher than a month ago, reflecting stronger fundamentals due to strong demand especially in the U.S.
Philippines’ owned Petron was seeking gasoline through its Singapore’s trading office. The company was looking to buy 150 KB of 87-octane grade gasoline and another 150 KB of 92-octane grade petrol for May delivery through a tender closing on April 22, with offers to stay valid until April 24.
Kuwait was also looking to buy gasoline for May delivery. It was seeking 25 KT through a tender which is expected to be awarded today.
The May crack is higher at $ 7.95 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10ppm sulphur content narrowed their discounts to 14 cents a barrel to Singapore quotes, the smallest discount levels since March 15. They were at a discount of 16 cents a barrel on Tuesday.
The gasoil market has been under pressure due to lack of arbitrage opportunities to Europe and availability of supplies even on the back of seasonal refinery turnarounds. The gasoil EFS widened to be around minus $13 per tonne on Wednesday. But traders said the arb window to Europe was still not quite open as it is usually profitable when the EFS trades at about minus $15-18 a tonne or below.
At current freight rates, however, gasoil arbitrage shipments to Latin America were doable.
Jet fuel cash discounts were also at their smallest levels in more than five weeks on Wednesday — at 12 cents a barrel to Singapore quotes, three cents lower than Tuesday’s discount of 15 cents per barrel.
The May crack for 500 ppm Gasoil is lower at $ 13.25 /bbl with the 10 ppm crack at 13.95 / bbl. The regrade is at – $ 0.15 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s fuel oil market firmed, with front-month 380-cst barge crack and cash differential both narrowing their discounts on Wednesday despite thin trade liquidity.
The May 380-cst barge crack was at $7.50 a barrel below Brent crude, up from minus $7.85 a barrel at the start of the day.
In the physical market, cash differentials of 380-cst HSFO narrowed to minus 88 cents a tonne to Singapore quotes, compared with minus $2.31 per tonne in the previous session.
The May 180 cst crack has improved to – $ 2.65 / bbl with the visco spread at $ 1.50 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
All our FO hedges for May and June have now been squared off.
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.