Oil prices hovered near six-month highs on Wednesday after data showed U.S. crude stockpiles surged to their highest levels since October 2017. Brent crude futures rose 6 cents to settle at $74.57 a barrel. WTI futures, however, fell 41 cents to settle at $ 66.89 a barrel.
The United States must be prepared for consequences if it tries to stop Iran from selling oil and using the Strait of Hormuz, Iran’s foreign minister, Mohammad Javad Zarif, warned on Wednesday. China, Iran’s biggest oil customer, has formally complained about the move.
Saudi Energy Minister Khalid al-Falih said on Wednesday that his country’s production in May would not vary greatly from previous months. He added that Saudi Arabia aimed to stick to its output quota fixed in a deal by the Organization of the Petroleum Exporting Countries, Russia and others, known as OPEC+, but that June numbers would be determined depending on customers’ needs.
U.S. crude inventories rose 5.5 million barrels last week, the Energy Information Administration said, far more than analysts’ forecast of an increase of 1.3 million barrels.
The major part of the rise in crude stocks would be attributable to a jump in net imports of 900 kbpd. Further, crude output also edged back to its record high at 12.2 million bpd.
Refinery utilization rates rose to 90.1 percent of total capacity, their highest since early February.
While distillate demand showed a healthy increase of 443 kbpd, gasoline demand was stagnant. What was also a bit surprising was that the increase in crude oil consumption resulted in a greater output of heating oil as opposed to gasoline.
Asia’s naphtha crack eased, but at $57.18 a tonne on Wednesday it was still only 0.7 percent away from the close to four-week peak reached in the previous session.
Buyers have been more active this week, seeking the fuel for June delivery, with spot premiums stronger on expectations that demand for June will be higher than May as most crackers in South Korea and Japan would have completed maintenance.
Malaysia-based Titan, for instance, had paid a low single-digit premium to Japan quotes on a cost-and-freight (C&F) basis for naphtha scheduled for first-half June arrival at Pasir Gudang. This sharply contrasted the slight discount it paid on April 16 for a cargo scheduled for second-half May delivery. LG Chem had also locked in naphtha for arrival in the first half of June but at premiums of about $6 a tonne to Japan C&F quotes.
These purchases came in the same week that Hanwha Total and Japan’s Asahi Kasei Mitsubishi Chemical Ethylene Corp had also bought the fuel for delivery in the first half of June and first half of July respectively.
The May crack has dropped to – $ 5.55 /bbl
No fresh news on gasoline markets. Light distillate stocks in Fujairah dropped by 347 kb to 10.84 million barrels
The May crack is lower at $ 6.95 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for gasoil with 10 ppm sulphur content narrowed their discounts to 17 cents a barrel to Singapore quotes, compared with a discount on 21 cents a barrel on Tuesday.
The ongoing spring refinery maintenance has not tightened the gasoil market as expected. China’s diesel exports in March rose to 2.71 million tonnes and nearly doubled from 1.51 million tonnes in February.
Cash discounts for jet fuel were at 35 cents a barrel to Singapore quotes on Wednesday, compared with a discount of 28 cents per barrel on Tuesday.
Middle distillate stocks in Fujairah rose marginally to close at 1.99 million barrels. Stocks are marginally higher than previous year levels.
The May crack for 500 ppm Gasoil is lower at $ 11.60 /bbl with the 10 ppm crack at 12.25 / bbl. The regrade is steady at $ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
No fresh news on FO markets today. Fuel Oil stocks in Fujairah jumped to seasonal record levels as demand for bunkers seems to have eased off.
The May 180 cst crack is stronger at – $ 1.080 / bbl with the visco spread at $ 1.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The sudden drop in Cal 20 distillate cracks allows us to close one tranche of positions for both Jet as well as 10 ppm gasoil.
The abrupt strengthening of FO cracks makes us recommend reinstating a position in the June crack at -$ 1.25 / 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.