Oil Prices slipped on Wednesday in the absence of any further positive cues from the market. Brent crude oil futures fell 36 cents to settle at $61.14 a barrel. The WTI March contract, which now becomes front month fell 39 cents to settle at $ 52.62 a barrel.
France’s foreign minister said he expected a European backed system to facilitate non-dollar trade with Iran and bypass fresh U.S. curbs imposed after Washington quit a landmark nuclear deal, would be established in coming days.
The Trump administration ratcheted up pressure on Venezuela’s President Nicolas Maduro on Wednesday, announcing U.S. recognition of the country’s opposition leader as interim president and signaling potential new sanctions against its vital oil sector. Potential U.S. sanctions on Venezuela’s crude oil exports, however, would hit U.S. refiners that are its biggest customers, as the OPEC nation would likely be forced to send more crude to China, India or other Asian countries. The U.S. share of Venezuelan exports has fallen in recent years with more shipments going to Russia and China, largely through oil for debt repayment structures.
Data from the American Petroleum Institute showed huge increases not only in crude inventories, but in gasoline and distillate stocks as well. If the weekly product builds are confirmed by government data on Thursday, it would be the eighth rise in a row for gasoline, and the fifth straight build for both distillates and gasoline.
Asia’s naphtha crack fell for a fifth straight session to an eight week low of $27.73 a tonne, dragged by ample supplies and weak gasoline fundamentals.
The February crack has has fallen further to -$ 7.15 /bbl.
Asia’s gasoline crack fell to a more than seven year low on Wednesday due to a stubborn glut that could expand further with new refining capacities coming on stream this year. Asia’s gasoline crack hit a discount of $1.67 to Brent crude, its lowest since November 2011.
China’s December gasoline exports at 1.28 million tonnes were at a seven month high. China’s total gasoline exports in 2018 at 12.88 million tonnes, up 22 percent from 2017.
Light Distillate Stocks in Fujairah rose by 127 KB to 10.45 million barrels.
The February crack has fallen to -$ 0.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for 10ppm gasoil were at 45 cents a barrel to Singapore quotes on Wednesday, against a 44 cent discount a day earlier.
Cash discounts for jet fuel were at $1.61 a barrel to Singapore quotes on Wednesday, compared with a $1.59 discount on Tuesday. This is a fresh low since October 2009.
A milder winter across the region so far this year has kept a lid on seasonal heating demand for kerosene. Winter in the northern hemisphere is not over yet, but warmer than normal temperatures are expected across East Asia through the end of this month. The Korean Peninsula will continue to experience temperatures of 2-3°C above normal through the next 10 days and moderate weather conditions would persist across Japan.
Middle distillate inventories Fujairah fell 24.4 percent from a week ago to 1.49 million barrels in the week to Jan. 21. The draw of 479 KBin the week to Monday takes Fujairah middle distillate stocks to their lowest in three weeks. Middle distillates stocks in the Fujairah oil hub have averaged 1.7 million barrels a week for the first three weeks of the year. They averaged 2.8 million barrels a week for 2018, against a weekly average of about 3.3 million barrels in 2017. Compared with year ago levels, the weekly Fujairah middle distillate stocks were down by 22 percent.
The February crack has eased to $ 13.40 /bbl with the 10 ppm crack at $14.35 /bbl. The regrade is lower at $ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front month high sulphur fuel oil crack extended gains on Wednesday amid weaker crude oil prices in the previous session and expectations of firming demand.
The February 380 cst barge crack against Brent crude was at minus $4.99 a barrel on Wednesday, compared with minus $5.27 a barrel in the previous session. This was the narrowest since Nov. 30, 2018.
Fuel oil inventories at the Fujairah Oil Industry Zone (FOIZ) climbed to a five week high in the week to Jan. 21. Fuel oil inventories at FOIZ climbed 845 KB in the week to Jan. 21 to a total of 8.42 million barrels, a 5 month high. Inventories were 18 percent higher than a year earlier.
In a sign of how the industry is preparing for the IMO change, Sinopec’s Shanghai refinery has produced its first batch of low sulphur bunker fuel totalling 6,000 tonnes.
The February 180 cst crack has strengthened to $ 0.50 / bbl with the visco spread at $ 0.35 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The Fuel Oil Cracks have strengthened even further. We will look to hedge the March crack in positive territory or Q2 at -$0.50 / bbl
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.