Crude Oil
Oil prices surged more than 2% on Wednesday after a better-than-expected U.S. crude inventories report. Brent crude futures settled at $62.40 a barrel, up $ 1.49 cents. WTI crude rose $ 1.90 to settle at $57.11 a barrel.
Oil prices were also supported by comments from Russian President Vladimir Putin that Russia will continue cooperation under a global supply-curbs deal with the Organization of the Petroleum Exporting Countries (OPEC).
Escalating Iran-related tensions also boosted prices. The U.S. aircraft carrier strike group Abraham Lincoln on Tuesday sailed through the vital Strait of Hormuz, through which a fifth of the world’s oil flows, as leaders in Iran blamed days of protests over fuel price hikes on foreign enemies.
U.S. crude oil stocks grew by 1.4 million barrels last week, much less than the 6 million-barrel build reported by the API on Tuesday. Crude inventories rose despite refinery runs increasing by 519 kbpd. However, crude in storage at Cushing, fell 2.3 million barrels, the biggest drawdown in three months.
Our material balance for crude suggests that crude and gasoline stocks should have drawn which distillate stocks should have built instead of the other way around. A huge increase in refining runs would have caused the impact.
Both gasoline and distillate demands seem to be low.
Naphtha
Asia’s naphtha crack was at a 2-1/2 week high of $84.15 a tonne as demand emerged after muted start to the week
The December crack is much higher at – $ 1.80 / bbl.
Gasoline
Asia’s gasoline crack rose for a second day to reach a three-session high of $9.12 a barrel.
The December crack is higher at $ 9.10 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for jet fuel inched up on Wednesday but still lingered close to their biggest discounts in more than nine months, touched in the previous session, due to persistent weakness in the physical market and overall tepid demand from the aviation sector.
Cash differentials for jet fuel were at a discount of 61 cents per barrel to Singapore quotes on Wednesday, compared with a discount of 63 cents per barrel a day earlier. The discount level on Tuesday was the widest since early February. Slowing economies, political unrest and trade tensions have all impacted the region’s aviation sector both in terms of passenger traffic and air cargo demand, which in turn is hurting the jet fuel market.
The December crack for 500 ppm Gasoil is lower at $ 12.95 /bbl with the 10 ppm crack at $ 13.90 / bbl. The regrade is at $ 1.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst high-sulphur fuel oil (HSFO) cash premiums and front-month time spread edged lower on Wednesday amid sustained selling pressure eroding demand for high-sulphur marine fuels. Demand for HSFO marine fuels is firmly on the decline ahead of the global cap on marine fuels starting January.
The December 180 cst crack is higher at -$ 22.30 / bbl with the visco spread at $ 1.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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.
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.