Crude Oil

Oil prices flared after reports of further rebel activity emerged from Houthi adding fears of geo political uncertainty. Brent crude oil futures  gained 65 cents to settle at $74.71 /bbl, while U.S. crude futures  rose 24 cents to settle at $ 68.64 /bbl.

Oil prices tumbled early on fears that oversupply could return. Iran’s oil minister Bijan Zanganeh said there would be no need to extend a pact between the Organization of the Petroleum Exporting Countries and non-OPEC producers if oil prices strengthened, the ministry’s official website SHANA reported.

India data released yesterday showed that demand in March remained largely flat month on month at 4.678 mb/d. Growth continues to be led by increases in gasoil and gasoline. Refinery runs also declined 264 kb/d month on month amid higher turnarounds, leading to a 144 kb/d decline in total product output. In particularly, diesel output fell 90 kb/d and this led to lower exports of the product in March. Crude runs are expected to rebound in Apr to  around 5.1 mb/d.


Asia’s naphtha crack was at its highest since April 13 on Monday at $71.75 a tonne on strong demand. South Korea’s Hanwha Total, SK Energy and LG Chem were snapping up cargoes, just days after GS Caltex, KPIC and Malaysia-based Titan bought a total of at least 170,000 tonnes for first-half June delivery.

The May crack has continues to recover to -$ 1.65 /bbl


Asia’s gasoline crack rose to a 1-1/2 week high of $6.50 a barrel but the value was more than 40 percent lower versus a year ago, with sellers grappling with oversupply since the start of the year. China exported a record high volume of gasoline in March of 1.7 million tonnes, smashing the previous record at 1.23 million tonnes in December 2017, official data showed.  China should speed up the liberalisation of its retail fuel pricing scheme as high gasoline prices have caused overinvestment in refining capacity and added to a domestic fuel glut.

Like Naphtha, the May gasoline crack too has recovered to $ 10.55 /bbl 

Click Here for a graphical depiction of Global Gasoline stocks by region.


Asia’s cash premiums for gasoil with 10 ppm sulphur content rose on Monday to the highest this year, helped by supply tightness from seasonal refinery turnarounds in the region and stronger demand. The cash premiums for the industrial fuel are at their highest levels since S&P Global Platts switched the benchmarks in gasoil grades in January this year to maximum sulphur content of 10 ppm sulphur, from 500 ppm sulphur previously. Cash differentials for 10 ppm gasoil  climbed to 54 cents a barrel to Singapore quotes, up from 50 cents on Friday.

Demand for diesel in India is set to hit a record in 2018 as the government targets massive infrastructure spending in this fiscal year, with Prime Minister Narendra Modi seeking a second term in elections in 2019. India’s diesel consumption growth in calendar 2018 may be more than double last year, analysts and traders told Reuters, aided by an expected regular monsoon this year that should boost demand in the world’s third-largest oil consumer for diesel used in harvesting and other farming, leading to higher rural spending.

Meanwhile, cash differentials for jet fuel  rose to 99 cents a barrel to Singapore quotes, from 90 cents on Friday

The May gasoil crack has increased $ 14.90 /bbl with the 10 ppm crack at $ 15.45 /bbl.  The regrade is at $ 0.90 /bbl.  

Click Here for a graphical depiction of Global Distillate stocks by region.

Fuel Oil

Asia’s 380-cst ex-wharf fuel oil premiums were pushed higher on Monday after it emerged that at least one supplier was in possession of an off-specification cargo of the fuel, tightening prompt supplies of the mainstay bunker fuel. The off-spec cargo is expected to lift premiums of the fuel over the short term until suppliers are able to replace the cargo and meet prompt customer demand.

The May 180 cst crack has sunk further -$ 7.40/ bbl. with the visco spread marginally coming in to $ 1.60 /bbl

Click Here for a graphical depiction of Fuel Oil stocks by region.

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 19 Middle distillates cracks are keeping on rising. For those who have hedged the strip, the MTM is likely to be a cause of concern and much discussion. This is a part and parcel of laying on hedges so far into the future. Hence, such hedges should only be taken if the team and the management can live with the MTM.

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.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

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