Crude Oil
US traders, on return to the markets on Tuesday, took cognizance of the bad economic numbers out of China and caused crude oil prices to retracte. Brent crude oil futures lost $1.20 to settleat $62.50 a barrel. WTI futures settled $1.23 below their previous close at $ 52.57 a barrel.
All global financial markets slumped on Tuesday as concerns over global growth spooked investors into looking for safe haven assets like government bonds or gold.
U.S. oil output from seven major shale formations is expected to rise by nearly 63,000 barrels per day (bpd) in February to a record 8.179 million bpd. The largest change is forecast in the Permian Basin of Texas and New Mexico, where output is expected to climb by 23,000 bpd to a record of about 3.85 million bpd in February.
Naphtha
Asia’s naphtha crack fell further to a two month low of $30.58 a tonne on Tuesday as demand for the feedstock was countered by ample supplies.
South Korea’s SK Energy bought heavy full range naphtha for first half March arrival at premiums of $4 to $5 a tonne to Japan quotes on a cost and freight (C&F) basis. This came a day after Hanwha Total bought a similar grade of naphtha for the same delivery period at premiums in the range of $2 to $3 a tonne.
The February crack has has stayed at -$ 6.60 /bbl.
Gasoline
No fresh news on gasoline markets today. However, the gasoline crack for February has moved into a discount.
The February crack has fallen to -$ 0.35 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil widened their discounts by a cent to 44 cents a barrel to Singapore quotes. The front month time spread for benchmark 10ppm gasoil, which has remained in contango since mid-November, was at a discount of 44 cents per barrel on Tuesday, compared with a 67 cents discount a month ago.
The overall sentiment in the gasoil market remained mixed, with some market watchers betting on its recovery, while others were still waiting for signs of improved fundamentals. The middle distillates market, however, is expected to strengthen from March onwards due to the upcoming refinery maintenance season.
Cash discounts for jet fuel were at $1.59 a barrel to Singapore quotes on Tuesday, compared with a discount of $1.58 on Monday..
The February crack has increased to $ 13.55 /bbl with the 10 ppm crack at $14.50 /bbl. The regrade is lower at $ 0.90 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Weaker crude oil prices helped the front month fuel oil crack narrow its discount to Brent crude on Tuesday to a more than one week high. Some trade sources also pointed to expectations of improved Asian fuel oil demand following the Lunar New Year holidays in early February as another source of support.
The February 380 cst barge crack discount against Brent crude was trading as low as minus $5.10 a barrel on Tuesday before retreating to about minus $5.40 a barrel. The front month crack discount was at minus $5.60 a barrel on Monday and was last narrower on Jan. 9 at minus $5.32 a barrel.
The February 180 cst crack has strengthened to $ 0.40 / bbl with the visco spread at $ 0.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The Fuel Oil Cracks have strengthened further in anticipation of demand for the Chinese New Year. We will keep observing the market and look for opportunities to hedge at higher levels.
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.