Oil settled down $2 a barrel on Friday and ended the week markedly lower, as traders worried that future U.S. interest rate hikes could weigh on demand and got nervous about mounting signs of ample crude and fuel supply.
London-traded Brent crude for March delivery did a final trade of $83.15. It settled the session down $2.14, or 2.5%, at $83. Brent’s intraday bottom was $81.81, a low since Feb. 6. For the week, the global crude benchmark was down 4%. Brent has slid in three of the past four weeks, losing more than 5% in that period.
New York-traded WTI crude for March delivery did a final trade of $76.33 on Friday. It settled the regular session down $2.15, or 2.7%, to $76.27. WTI’s session low of $75.08 marked a near two-week bottom. For the week, the U.S. crude benchmark was down 4.4%. WTI has fallen in three of the past four weeks, losing nearly 7% in that stretch.
The key to the pricing conundrum is the expected demand from China The country is expected to import a record amount of crude oil in 2023 due to increased demand for fuel as people travel more following the dismantling of COVID-19 controls and as a result of new refineries coming onstream, analysts said.
On Thursday, two Fed officials warned additional hikes in borrowing costs are essential to curb inflation. Cleveland Fed chief Loretta Mester said Thursday U.S. interest rates need to rise to above 5% and remain there an extended time in order to bring inflation down meaningfully. St. Louis Fed President James Bullard, often viewed as the most hawkish official at the central bank, also said on Thursday he hadn’t been in favor of lowering the quantum of rate hikes – something that happened the last two months – until inflation was under better control.
Various signs of ample supply also weighed on the market. Russian oil producers expect to maintain current volumes of crude oil exports, despite the government’s plan to cut oil output in March, the Vedomosti newspaper said on Friday, citing sources familiar with companies’ plans.
The oil and gas rig count, an early indicator of future output, fell by one to 760 in the week to Feb. 17, energy services firm Baker Hughes Co said on Friday. Despite this week’s rig decline, Baker Hughes said the total count was still up 115, or 18%, over this time last year.
Asia’s naphtha markets gathered steam last week, posting gains of about 32% and mirroring Northwest Europe markets, as global supply tightened while traders avoided Russian-origin cargoes and arrivals from the West dwindled.
A total of 50,000 tonnes of naphtha for first-half April and May loading changed hands in physical markets.
The crack climbed by $10.70 to $101.63 a tonne on Friday and the backwardation widened to highest in nearly 11 months to $20 per tonne.
Naphtha stocks at the Amsterdam-Rotterdam-Antwerp (ARA) commercial hub plunged to 244,000 tonnes in the week ended Feb. 16, Insights Global data showed.
The March crack is higher at -$2.00 per barrel
Asia’s Gasoline crack settled 10 cents higher at $11.94 per barrel on Friday.
Gasoline stocks Naphtha stocks at the Amsterdam-Rotterdam-Antwerp (ARA) commercial hub were stable at 1.436 million tonnes in the week ended Feb. 16, Insights Global data showed, an increase of 12,000 tonnes.
The March crack is higher at $13.80 per barrel.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s refining margins for gasoil and jet fuel logged weekly declines on Friday as regional exports remained strong.
News may not be available today. Will update when received.
Refining margins for 10 ppm sulphur gasoil closed the week at $22.05 per barrel, sliding by 6% week-on-week.
Cash differentials for 10 ppm sulphur gasoil eased to $1.24 a barrel.
“China’s February-loading exports are assessed at 638,000 tonnes so far and are forecast to rebound to 2.4 million tonnes as refiners raise runs and increase gasoil production,” said Zameer Yusof, senior analyst for middle distillates at Refinitv Oil Research.
Meanwhile, jet fuel refining margins fell by 11% week-on-week, closing the session at $19.80 per barrel.
Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area hit a new two-year high last week, data from Dutch consultancy Insights Global showed on Thursday.
Gasoil stocks are at their highest since March 2021 on the back of ample imports, including from East Asia and India, said Insights Global’s Lars van Wageningen.
The March crack for 10 ppm Gasoil is lower at $22.30 /bbl. The 10 ppm regrade is at -$1.95 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s spot cash premiums and refining margins for 0.5% very low sulphur fuel oil (VLSFO) ended at a month’s low on Friday, weighed by persistent supply inflows and tepid bunkering demand. The spot 0.5% VLSFO cash differential edged lower to a premium of $11.70 a tonne. The front-month crack was at a premium of $9.10 a barrel at Friday’s Asia close.
Meanwhile, margins for 380-cst high sulphur fuel oil (HSFO) rebounded slightly this week, closing at a discount of $17.63 a barrel at the Asia close.
Fuel oil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub slipped to two-month lows of 1.08 million tonnes in the week ended Feb. 16, latest data from Dutch consultancy Insights Global showed.
The March crack for 180 cst FO is higher at – $14.70 /bbl with the visco spread at $3.05 /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.