Crude Oil
Crude prices once again held firm, although they dropped marginally in the face of bearish DOE data. Brent crude settled just one cent lower at $67.07 a barrel. The April WTI contract settled 20 cets lower at $56.96 a barrel.
Nigeria said on Wednesday it was prepared to reduce its oil output after supplies from the OPEC member rose in January.
Washington and Beijing have started to outline commitments in principle on the stickiest points in their trade tariff dispute.
DOE Data
The DOE data was bearish in nature in our opinion. With run rates even lower, albeit marginally, crude stocks built as crude production touched the 12 mbpd mark. While imports continued to stay low due to outages in Canada and elimination of imports from Venezuela, exports hit record highs of 3.6 mbpd. With these kinds of numbers, we really do not see any shortage of crude should some be needed.
While gasoline stocks drew, they still continue to remain near 5 years highs. Gasoline demand still seems to be slightly on the lower side at 8.8 mbpd. This is about 200 kbpd lower than the previous year. Distillate stocks drew thanks to a healthy increase in demand. Demand levels are similar to last year. We would guess that prices are at a fairly pivotal point and demand elasticity would be quite high at these levels.
Naphtha
Asia’s front-month naphtha crack for first-half April eased by 70 cents to a two-session low of $44.05 a tonne on muted demand.
The March crack is lower at -$ 7.15 /bbl
Gasoline
Asia’s gasoline crack returned to positive territory for the first time since Feb. 11, supported by demand from Indonesia.
Indonesia’s state-owned Pertamina has been seeking gasoline through tenders that traders said were additional demand. It was looking to buy the fuel through a three-month contract as well as spot tenders. Based on data released by Singapore Enterprise, Indonesia had imported close to 240,000 tonnes of gasoline from Singapore in the week ended Feb. 20, making this its highest weekly purchase from the country in close to a month.
Singapore Light Distillate stocks rose by 840 KB to a new record high of 17.3 million barrels in the week to Feb 20, data from Enterprise, Singapore showed.
The March crack is lower at $ 0.70 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Gasoil cash differentials narrowed their discounts by a cent to 35 cents a barrel to Singapore quotes on Thursday.
Asia’s cash discounts for jet fuel widened on Thursday as middle distillate inventories in Singapore climbed to their highest levels in a month. Cash discounts for jet fuel were at 33 cents a barrel to Singapore quotes on Thursday, compared with a discount of 30 cents per barrel a day earlier. The cash differentials for jet fuel dropped to their weakest levels in over 10 years last month as a warmer-than-normal winter across the region this year kept a lid on seasonal heating demand for kerosene.
Singapore Middle Distillate stocks rose by 776 kb to 12.2 million barrels in the week to Feb. 20. This is the first inventory build in five weeks.
The March crack is higher at $ 14.40 /bbl with the 10 ppm crack at $15.35 /bbl. The regrade is steady at – $ 0.25 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s cash premiums for mainstay 380-cst high-sulphur fuel oil rose on Thursday after onshore inventories in Singapore slipped to a two-week low. Cash premiums for 380-cst high-sulphur fuel oil (HSFO) were $2.02 a tonne to Singapore quotes, up from Wednesday’s $1.98, which was the lowest in more than eight months.
Fuel oil stocks in Singapore decreased by 2.6 million barrels to 20.55 million barrels, as per data from Enterprise Singapore.
The region’s 180-cst fuel oil crack to Dubai crude slipped for a second straight session to 39 cents a barrel on the back of firmer crude oil prices. The more actively-traded 380-cst barge crack to Brent crude for March fell to minus $4.27 a barrel during Asian trading hours, compared with minus $3.84 a barrel on Wednesday.
The March180 cst crack has collapsed to – $ 0.10 / bbl with the visco spread at $ 0.75 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Over the past two days we have closed a couple of FO hedges. Today, the Cal-20 middle distillate cracks have jumped with 10 ppm gasoil close to $ 20.00 /bbl. Should the levels exceed this number, we will add one more tranche of hedges.
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.