Crude Oil
Oil prices rose to near four-month highs on Monday as OPEC decided that the production cut will stay in place till June and not be reviewed in April. Brent crude settled 38 cents higher at $67.54 a barrel. WTI crude futuregained gained 57 cents to settle at $59.09 a barrel after hitting a 4 month high at $ 59.23.
Saudi Arabia, on Sunday, signaled that producers may need to extend the 1.2 mbpd of curbs past June into the second half of 2019. The kingdom has in general been cutting more dramatically than some other nations, while Russia, the largest non-OPEC member in the pact, is less enthused about continuing production cuts.
Exports from OPEC’s biggest producer fell to 7.3 million bpd in January from 7.7 million bpd in December, official data showed.
Overall U.S. crude inventories were forecast to have drawn down last week, the second consecutive weekly decline. U.S. oil output from seven major shale formations was expected to reach a record 8.6 million barrels per day (bpd) in April, up 85,000 bpd, which would be the smallest monthly increase since May 2018, the government forecast.
The International Energy Agency said on Friday that the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 500 kbpd. It said a comfortable supply cushion by OPEC could prevent any price rally in case of possible disruptions and that non-OPEC oil output growth led by the United States should ensure demand is met.
Naphtha
Asia’s naphtha crack slipped to $54.82 per tonne on Monday, retreating from a 2-1/2 month high of $57.55 per tonne hit in the previous session.
The April crack is higher at -$ 5.20 /bbl
Gasoline
Asia’s gasoline crack edged 12 cents higher to $6.21 a barrel. On Thursday the gasoline crack hit a five-month high of $6.66 per barrel. Margins of the light distillate fuels have been recently boosted by firm demand and tightening supplies amid heavy refinery turnarounds in Asia.
The April crack is higher at $ 5.45 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian refining margins for 10ppm gasoil slipped on Monday, while cash discounts for the industrial fuel widened as buying interest weakened in the physical market. Refining margins, or cracks, for gasoil with 10ppm sulphur content eased to $13.84 a barrel over Dubai during Asian trading hours, compared with $14.05 a barrel on Friday.
The East-West gasoil arbitrage window is not open at the moment, but ship tracking data showed two vessels were booked to carry 80,000 tonnes each of diesel from India and the Middle East to northwestern Europe around March 20-22. The gasoil EFS narrowed to around minus $12 per tonne on Monday, compared with minus $13 on Friday. The arbitrage is usually profitable when the EFS trades at about minus $18 a tonne or below.
Refining margins for jet fuel dropped on Monday to $12.94 a barrel over Dubai crude, their weakest since November 2017. They were at $13.45 a barrel on Friday.
Cash differentials for jet fuel were at a discount of 31 cents a barrel to Singapore quotes, as against a discount of 26 cents per barrel a day earlier.
The April crack is lower at $ 12.65 /bbl with the 10 ppm crack at $13.60 /bbl. The regrade is at $ 0.15/bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for cargoes of Asia’s 380-cst fuel oil rebounded on Monday, with higher trade liquidity and stronger deal values lifting them off an 11-month low in the previous session. 380-cst cash premiums rose to $1.42 a tonne to Singapore quotes, from $0.84 per tonne on Friday.
The April 180 cst crack is at $ 0.20 / bbl with the visco spread at $ 1.05 cents/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh hedges to consider today.
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.