Crude Oil
Oil prices edged lower on Wednesday as the market took a breather on expectations OPEC may raise supplies as early as June, although geopolitical risks kept a floor under the market. Brent rose 35 cents to settle at $ 79.57 /bbl. West Texas Intermediate crude settled 11 cents lower at $ 72.13 /bbl. This dichotomy is probably due to expiry.
OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters.
API Data
The API reported a draw of 1.3 million barrels of crude this week, slightly less than expected. While distillate stocks also fell less than expected, the build of 1 million barrels of gasoline was a bit surprising. Confirmation from DOE will happen later today.
Naphtha
Asia’s naphtha crack rose for the fourth straight session on Tuesday towards a five-month high of $115.45 a tonne on the back of strong demand. The demand for naphtha in general has been firm but shipments from the Middle East as well as the West in May were seen below the monthly average in May and June respectively.
Overall exports from India, a key exporter of light distillates, were lower last month due likely to refinery maintenance. Its naphtha exports at 550,000 tonnes, for instance, were at their lowest level monthly since February 2017.
The June crack is slightly lower at $ 0.30 / bbl
Gasoline
Asia’s gasoline crack was at a 5-1/2 month high at $9.91 a barrel.
Once again, supplies appear to be lower out of India. Gasoline exports from India last month at 920,000 tonnes were not only 24 percent lower than March but were also the lowest in more than three years.
The June crack is slightly lower $ 12.10 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s jet fuel cash premium to Singapore benchmark prices was above 30 cents a barrel on Tuesday as the demand outlook remained positive. Although the current cash differential has fallen by nearly 85 percent from this year’s high of $2.28 a barrel on Feb. 27, it was sharply higher versus the same period last year.
India’s shipment of oil products was down versus a month ago, official data showed. Diesel, for instance, fell by about 31 percent from a month ago to 1.55 million tonnes, making it the lowest month of diesel exports since May 2016. Its April jet fuel shipment at 490,000 tonnes was also lower versus March volumes of 640,000 tonnes.
In the Platts trading window, Winson oil continues to remain an aggressive buyer picking up 3 out of four cargoes traded yesterday.
The June crack is weaker at $ 15.65 / bbl with the 10 ppm crack quoting at $ 16.35 /bbl. The regrade has also dropped to $ 0.45 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Expectations of narrow arbitrage supplies in June helped firm Asia’s fuel oil market on Tuesday with the 380-cst fuel oil front-month time spread and cash differentials of the fuel edging higher.
Western arbitrage flows into Singapore in June are estimated at about 4 million tonnes, compared to an estimated 5 million tonnes in March. Firm seasonal demand for fuel oil in power generation also capped Middle Eastern arbitrage flows into Singapore at about 1 million tonnes in June, down from nearly 2 million tonnes imported since the start of the year.
The June 180 cst crack is lower at -$ 3.85 / bbl. The visco spread has narrowed to $ 1.55/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The June 180 cSt-Dubai crack has receded from the -$3.50 levels. As of now, our reluctance to hedge looks like a missed opportunity. These are decisions that we have to live with.
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.