Crude prices marked new four month highs as DOE data showed huge draws in crude stocks in the US. Brent crude settled 89 cents higher at $68.50 a barrel. WTI crude futures gained 80 cents to settle at $59.83. The more active second month WTI future settled at $ 60.23 a barrel, up 94 cents.
Prices rose after the U.S. Energy Information Administration posted a large and unexpected drop in crude inventories due to strong export and refining demand. However, they gave up some of their gains after signs that the US-China trade talks were not going on as well as hitherto projected.
The U.S. Federal Reserve brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year amid signs of an economic slowdown, and saying it would halt the steady decline of its balance sheet in September.
The huge drop in Crude stocks caught the whole market by surprise. This was caused by a strong rise in exports to near record levels as can be seen from the material balance statement below. The draw in product stocks seems to have been caused by a strong increase in demand, though our material balance statement would suggest the gasoline stocks should have built rather than show the strong draw that they have.
The increase in distillate demand was quite substantial and would bear watching to see if distillate stocks don’t make fresh lows this year..
Asia’s naphtha crack jumped to a 2019 high of $63.70 a tonne on Wednesday, up from $60.82 a tonne in the previous session and $54.82 a tonne at the start of the week..
The April crack is steady at -$ 5.15 /bbl
Asia’s gasoline crack was at its highest since Oct. 2 at $7.19 a barrel, up from $6.71 a barrel in the previous session.
Light distillates stocks held in Fujairah jumped to a total of 11.559 million barrels in the week ended March 18, up 11 percent, or 1.16 million barrels, from the week before, data from S&P Global Platts showed. Compared with the same time last year, Fujairah light distillate inventories are now 51 percent higher.
The April crack is higher at $ 5.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for 10ppm gasoil narrowed to 20 cents a barrel to Singapore quotes, compared with a 23-cent discount on Tuesday.
Cash differentials for jet fuel were at a discount of 37 cents a barrel to Singapore quotes on Wednesday, compared with a discount of 40 cents per barrel a day earlier.
Distillate stocks in Fujairah dropped by 357 kb to 2.25 million barrels.
The April crack for 500 ppm Gasoil is steady at $ 13.15 /bbl with the 10 ppm crack at 14.10 / bbl. However, the regrade has rebounded into positive territory at +$ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month viscosity spread climbed to a seven-month high on Wednesday following steady gains since the start of the previous week. The April viscosity spread rose as high as $9 per tonne on Wednesday but slipped to around $8.25 per tonne after Asia trading hours.
Ample supplies of high-viscosity fuel oils and generally tighter supplies of low-viscosity blendstocks have helped boost the price differential between 180-cst and 380-cst fuel oil.
The April 180 cst crack is at – $ 0.10 / bbl with the visco spread at $ 1.25 cents/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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.