Crude Oil
Oil prices continued to rise, even as US President Trump protested that oil prices were artificially increased. Brent crude oil futures gained 28 cents to settle at $74.06 /bbl, while U.S. crude futures rose 7 cents to settle at $ 68.36 /bbl.
Trump had taken to Twitter early Friday to blame OPEC for “artificially high” prices. OPEC ministers, however, were quick to respond to Trump’s tweet, according to news reports, with Saudi energy minister Khalid al-Falih saying there is “not such a thing as artificial prices.
Oil prices notched their second straight weekly gain, with WTI rising about 1.5%, while Brent saw a weekly increase of around 2%.
US Drillers added 5 rigs in the week to April 20, bringing the number of active rigs up to 820, according to the Baker Hughes weekly report. This is the highest number of rigs since March 2015.
In other news, Libya said oil production is expected to drop 70-100kbd due to a fire which broke out after a “terrorist” attack on an oil pipeline. The pipeline connects the Waha region to Libya’s biggest crude oil terminal, Es Sider. The damage is expected to take several days to repair.
23 Apr 18
Mostly done…………
Brent tested a high of $ 74.75/bbl before easing to close the week at $ 73.98/ bbl. We have the second consecutive week of gains, though the action over the last 2 days has been flat and undecided.
Last week we had suggest staying Long and adding to longs at $ 71/bbl, using March’18 swing high of 70/bbl as short-term support. The market traded down nicely and longs initiated as recommended are in the money.
We are currently working with long term targets of $ 75-76/ bbl, derived from a supply line holding down the commodity for multi month corrections since June 2016. For this month – Apr2018 – this translates to a supply area at $ 74-76/bbl.
Trading Strategy
This is the area to take profits on a significant portion of long holding in the $ 74 – 76 /bbl area, and carry-over a small long position with a stop below 73. But the emphasis is clearly on booking out long positions as the trend, while still positive, is looking tired.
Subject to an April 2018 close above the key resistances, we expect the commodity to react back down to 68-69 levels. The signals for this are still awaited. Whether or not there is a reversal of the larger trend depends on market action at 69.
Supports and Resistances
Short Term Supports come at $ 72.70 / bbl area and then $ 71.60/bbl Area
Immediate Resistance would be the high of $ 74.75 /bbl and then in the $ 75.50 – 75 area.
Naphtha
Asia’s naphtha crack was at a five-session high of $73.70 /MT, with at least six buyers having emerged seeking cargoes. Cash premiums are being quoted at around $ 6 – 9 / MT above CIF Japan quotes.
The May crack has has recovered a little to -$ 1.85 /bbl
Gasoline
Asia’s gasoline crack recovered 18 cents to a two-session high of $5.60 a barrel on Friday after diving to its lowest since August 2016 in the previous session as high oil prices and oversupply dragged. The persistent weak gasoline fundamentals had caused Asia’s refining margins to dip to a three-month low in the previous session but it managed to climb above $6 a barrel on Friday.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Like Naphtha, the May gasoline crack too has recovered to $ 10.10 /bbl
Distillates
Cash premiums for gasoil with 10ppm sulphur content rose to 50 cents a barrel to Singapore quotes, up from 47 cents on Thursday. Cash differentials for jet fuel fell to 90 cents a barrel to Singapore quotes from 94 cents on Thursday. Gasoil stocks have fallen across all major storage regions around the globe and could be a cause for concern in the medium term.
Click Here for a graphical depiction of Global Distillate stocks by region.
The May gasoil crack has increased $ 14.80 /bbl with the 10 ppm crack at $ 15.40 /bbl. The regrade has eased to $ 0.80 /bbl.
Fuel Oil
The front-month arbitrage spread firmed on Friday after data this week showed fuel oil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) oil hub climbed to their highest level since Dec. 21, while Singapore inventories of the fuel fell to their lowest since early June 2017. The May East-West arbitrage spread rose to about $13.50 a tonne on Friday, up from about $13 in the previous session. The tighter supplies in Singapore also helped boost the May 380-cst fuel oil time spread to about $1.10 /MT on Friday, from about 75 cents /MT in the previous session.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The May 180 cst crack has is unchanged at -$ 6.40/ bbl. with the visco spread marginally higher at $ 1.75 /bbl
Hedge Recommendations
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.
Cal 2019 continues to be strong. For today, we will add on a third tranche of Jet – Dubai crack at $ 19.10 / bbl
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.