Global oil benchmark Brent and U.S. crude’s West Texas Intermediate, or WTI, benchmark settled down on Friday, logging a third weekly loss in four, reacting to the Covid clampdown on Shanghai, as well as the prospect of weaker global growth and higher interest rates.
Brent crude futures settled Friday’s trade down $2.13, or 1.97%, at $106.20 per barrel. For the week, Brent showed a 4.5% loss that came after a near 9% gain last week and the 13% drop in two prior weeks. If the declines keep up, April will be the first month in the negative this year for Brent.
WTI crude futures settled Friday’s trade down $2.04, or 1.97%, at $101.75. Like Brent, WTI showed a drop of 4.5% for the week, and similar volatility to the U.K. benchmark in three previous weeks.
According to official government data released this week, China’s economy grew 4.8% year on year in January-March. But the IMF and banks including UBS, Bank of America and Barclays this week downgraded their growth forecasts for China in 2022.
Federal Reserve Chair Jerome Powell on Thursday said a half-percentage-point increase in U.S. interest rates “will be on the table” at the next Fed policy meeting in May, pushing the dollar to more than a two-year high. A stronger greenback makes oil and other commodities more expensive for those holding other currencies.
Economists said despite the positive first-quarter data, storm clouds were on the horizon as retail sales, a key indicator of economic health, fell 3.5% in March compared with the same period last year.
In the meantime, as a result of the Shanghai lockdown, Bloomberg reports that China’s demand for gasoline, diesel and aviation fuel in April is expected to slide 20% from a year earlier. That would be equivalent to a drop in crude oil consumption of 1.2 million barrels a day, they said, and will be the largest hit to demand since the lockdown more than two years ago in Wuhan — the central Chinese city where Covid-19 was first reported in 2020.
The U.S. oil rig count rose by one to 549 this week, the highest number since April 2020, according to a Baker Hughes Co report.
Speculators’ net long bets on the U.S. dollar fell for a third straight week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.
At a global level, the death toll from the COVID-19 virus rose to 6.24 Million (+1,013 DoD) yesterday. The total number of active cases fell by 130,000 DoD to 41.21 million. (Click here for details).
No fresh news on the Naphtha markets.
The May crack is lower at -$ 2.25 per barrel
Asia’s gasoline refining profit margin registered a weekly gain of nearly 8%, buoyed by strong demand from the region’s biggest buyer Indonesia amid the festival of Ramadan and tight supplies.
The crack eased slightly to $19.68 a barrel on Friday, down 3 cents from the last close. Gains were capped by fears of demand destruction in China due to COVID-19 lockdowns.
Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area were broadly stable at 1.35 million tonnes in the week to Thursday, while naphtha inventories increased to 305,000 tonnes from 277,000 tonnes, data from Dutch consultancy Insights Global showed.
The May crack is higher at $21.55 per barrel.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash premiums for 10 ppm gasoil dipped for a second straight session on Friday, but traders expect the regional gasoil market to remain well supported in the near term due to tight supplies across the globe. Cash differentials for gasoil with 10 ppm sulphur content were at a premium of $7.76 a barrel to Singapore quotes, compared with $8.55 per barrel a day earlier.
“Prompt supply tightness in the Northwest European market continues to colour sentiment in Asia, leading benchmarks to fresh record highs,” Zameer Yusof, senior analyst at Refinitiv Oil Research, said in a note.
Refining margins, or cracks, for 10 ppm gasoil slipped to $39.43 a barrel over Dubai crude during Asian trading hours on Friday, down from $42.45 per barrel on Thursday. Cracks for the benchmark gasoil grade in Singapore have shed 4.8% this week, their first weekly drop in three, Refinitiv data showed.
Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp refining and storage hub dropped 1.6% to 1.4 million tonnes in the week ended April 21, according to Dutch consultancy Insights Global. ARA jet fuel inventories slid 6.7% this week to 897,000 tonnes due to firmer demand.
Gasoil stocks stood at an eight-year low, dropping despite demand from inland locations along the Rhine river falling to its lowest February 2020, Insights Global’s Lars van Wageningen said.
The May crack for 500 ppm Gasoil is higher at $40.35 /bbl with the 10 ppm crack at $41.35 /bbl. The regrade is at -$9.80 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month crack for 0.5% very low-sulphur fuel oil (VLSFO) rose on Friday, partly supported by expectations for tighter supplies in the near term due to limited Western arbitrage exports to Asia.
The front-month VLSFO crack edged higher to $21.22 per barrel against Dubai crude during Asian trading hours, compared with a near two-month low of $21.09 per barrel on Thursday.
Cash premiums for Asia’s 0.5% VLSFO climbed to $22.55 a tonne to Singapore quotes, up from $20.23 per tonne a day earlier.
Meanwhile, Asia’s cash premiums for 380-cst high sulphur fuel oil (HSFO) slipped to $26.43 per tonne to Singapore quotes, as against a premium of $26.58 per tonne in the previous session.
The front-month barge crack for 380-cst HSFO traded at a discount of $14.13 a barrel to Brent on Friday, compared with minus $14.32 a barrel on Thursday.
Fuel oil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose 0.6% to 954,000 tonnes in the week to April 21, data from Dutch consultancy Insights Global showed.
The May crack for 180 cst FO is lower at -$0.15 /bbl with the visco spread at $3.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We shall lay on a fresh tranche of 10ppm Gasoil Dubai for Cal 23 at current levels of $ 20.05 / 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 refinery.
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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.