Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude prices settled up 6% on Wednesday, recouping virtually all of what they lost in the previous session. 

Brent crude settled at $64.41, up $3.62, or 6%, recovering most of the previous session’s declines. WTI settled at $61.18 per barrel, up $3.42, or 6%, also recouping most  of Tuesday’s losses.

The rebound was largely technical, though it was also helped by a benign weekly dataset on U.S. oil supply-demand and reports of a vessel blockage in the Suez Canal waterway, where at least 10% of the world’s oil passes through.

Eight tug boats were attempting on Wednesday to free a 400 metre (440-yard) long container ship that ran aground in the Suez Canal, blocking vessels passing through one of the world’s most important waterways, the authority that runs the canal said.

DOE data

The data superficially looks quite bearish with builds being reported across the board. However, the crude build is quite puzzling especially in light of the jump in refining rates by 5.5% to 81.6%. This more than compensates for the drop in exports; as can be seen in our material balance statement below.

The build in gasoline also appears mistaken, though there is a question mark because the drop in gasoline production given the increase in run rates is equally puzzling. If we examine the statement, we see that the crude used has gone up by close to a million barrels where as the net products produced is more or less unchanged. In the light of this analysis, we have to conclude that the data is far more bearish than it looks.

At a global level, the death toll from the COVID-19 virus rose to 2,756,067 (+10,410 DoD) yesterday. The total number of active cases rose by around 160,000 DoD to 21.38 million. (Click here for details)

Asia’s naphtha crack rose to $102.93 per tonne on Wednesday, up from $99.33 per tonne a day earlier.

The April crack is lower at $0.90 /bbl

Asia’s gasoline crack edged higher on Wednesday, buoyed by expectations that seasonal maintenance at regional refineries would keep supplies tight in coming months. The crack inched up to $5.80 per barrel on Wednesday, compared with $5.57 per barrel a day earlier. The crack has shed about 9% since hitting a recent high of $6.37 on March 15.

Light distillate stocks in Fujairah dropped by 739 KB to 6.91 million barrels, data via S&P Global Platts showed.

The April crack is higher at $7.70 /bbl.

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

Cash differentials for 10 ppm gasoil were at a discount of 25 cents per barrel to Singapore quotes yesterday, compared with an 18-cent discount on Tuesday.

Asia’s cash differentials for jet fuel dropped for a third consecutive session on Wednesday, weighed by worries that aviation demand would come under renewed pressure from reimposed coronavirus lockdowns in several markets.

Cash differentials for jet kero widened further by one cent to a discount of 52 cents per barrel to Singapore quotes on Wednesday.

The front-month time spread for the aviation fuel in Singapore, which has consistently stayed in contango since February 2020, traded at minus 40 cents per barrel on Wednesday, Refinitiv Eikon data showed.

Middle-distillate inventories in the Fujairah Oil Industry Zone rose 5.6% to 3.7 million barrels in the week ended March 22, data via S&P Global Platts showed.

The April crack for 500 ppm Gasoil is higher at $4.70 /bbl with the 10 ppm crack at $ 5.50 / bbl. The regrade is at -$ 1.55 /bbl. 

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

Asian cash premiums for cargoes of 0.5% very low-sulphur fuel oil (VLSFO) fell on Wednesday to their lowest so far in 2021, amid limited buying interest and trade liquidity in the Singapore window.

VLSFO cash premiums, which climbed to a near one-year high of nearly $6 per tonne above Singapore quotes at the start of February amid falling supplies, have steadily narrowed in recent weeks as arbitrage supplies helped replenish inventories in and around the Singapore hub, trade sources said. The cash premium fell to 45 cents a tonne on Wednesday, its lowest since Dec. 28.

Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 989,000 barrels, or about 156,000 tonnes, to 7.115 million barrels, or 1.12 million tonnes, data via S&P Global Platts showed. Fujairah’s fuel oil stocks sank to the lowest since the week to Dec. 31, 2018 amid firm output demand and as Uniper’s Fujairah refinery slowly resumes fuel oil production after suffering disruptions earlier in the month that contributed to narrowing VLSFO bunker supplies, trade sources said.

The April crack for 180 cst FO is higher at  -$3.25 /bbl with the visco spread at $0.95 /bbl.

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

No fresh action today. 

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.

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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