Crude Oil
Oil prices retraced as fears about the US reimposing sanctions on Iran receded. Brent crude oil futures gave up 85 cents to settle at $73.86 /bbl, while U.S. crude futures receded 94 cents to settle at $ 67.70 /bbl.
Macron said the two leaders discussed three new elements to the deal, which will include a longer ban on Iran’s ability to develop nuclear weapons, limits on its ballistic missile testing and stopping its other destabilizing activities in the Middle East. But as of now, Trump has made no promises to continue waiving sanctions on Iran on May 12.
Over the last two weeks, managed money has increased net length in positions to near record levels. The net length in the six most important oil contracts was reported to be 1.411 billion barrels. While it was still short of the record net length of 1.484 billion barrels, the ratio of longs to shorts was a hair raising 14:1. This is an indication that funds are fairly confident of being able to exit their length into a rising market rather than have any fears of the markets collapsing in the near future.
API DATA
The API reported a build of 1.1 million barrels catching the market, which had expected a draw of 2.6 million barrels, by surprise. However, the API also reported larger than expected draws in both gasoline and gasoil. Further, inventories at Cushing were also reported as lower by 930 kb.
As usual, the markets will await confirmation from the DOE data to be released today.
Naphtha
Asia’s naphtha crack rose for the third straight session on Tuesday to hit $74.28 a tonne, highest since April 13 as demand for June cargoes persisted.
Demand for heavy full-range naphtha for June delivery from Hanwha Total has been unusually firm. The petrochemical maker who operates two condensate splitters is buying heavy full-range naphtha as substitutes to high-priced condensates.
The May crack has continues to recover to -$ 1.55 /bbl
Gasoline
Asia’s gasoline crack, similar to naphtha, extended gains for the third straight session to reach $6.82 a barrel, highest since April 11. Supplies in general were seen high, especially with China shipping out record volumes in March. Over in Europe, there were still some 100,000 tonnes of gasoline stored on tankers off the coast of northwest Europe. But this was down from levels at more than 400,000 tonnes seen in early April.
The May gasoline crack however, has dropped to $ 10.45 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s jet fuel cash differentials climbed on Tuesday to the highest in over two weeks, lifted by expectations for strong summer travelling demand amid tightening supplies, while cash premiums for 10ppm gasoil hit a fresh high for this year. Cash differentials for jet fuel gained to $1.09 a barrel to Singapore quotes, up from 99 cents on Monday.
Meanwhile, cash differentials for gasoil with 10 ppm sulphur content edged higher to 55 cents a barrel to Singapore quotes, up from 54 cents on Monday. Gasoil cash premiums 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.
The May gasoil crack has strengthened to $ 15.00 /bbl with the 10 ppm crack at $ 15.60 /bbl. The regrade is at $ 1.00 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst high-sulphur fuel oil market jumped on Tuesday on signs of tight finished grade supplies of the fuel after reports that some off-specification quantities of the fuel were circulating in the bunker fuels market on Monday. Cash premiums for 380-cst soared to an 11-month high on Tuesday amid elevated deal values in the Singapore trading window, while the front-month time spread of the fuel jumped to its highest since October.
The May 180 cst crack has improved marginally to -$ 7.30/ bbl. with the visco spread expanding to $ 1.65 /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.
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.