Crude Oil
Oil prices rallied sharply to end at an eight-week high on Friday, as the prospect of an extension to OPEC-led production cuts into next year helped futures notch their largest weekly advance since July. Brent crude jumped $ 1.54 to settle at $70.45 / bbl. WTI futures also gained $ 1.58 to settle at $ 65.88 /bbl.
Oil’s impressive gains defied a slump in global stock markets, which sank in response to worries about a brewing trade war between the U.S. and China.
Sentiment improved after Saudi Energy Minister Khalid al-Falih said OPEC members would need to continue coordinating with Russia and other non-OPEC oil-producing countries on supply curbs in 2019 to reduce global oil inventories.
For the week, WTI crude jumped nearly 5.7%, while Brent soared 6.4%, their biggest weekly gains in eight months.
The number of active oil rigs rose by 4 to 804.
In the week under review, Brent has almost scaled back to the highs of January 2018, making a weekly high at 70.57.
It’s been a very bullish week that
- Triggers the upward reversal of an almost 2.5 month decline and
- Goes forward and confirms the reversal with along trending action, gaining 6.4% over the week. The momentum has been strong and not quite in the overbought territory yet.
Our last Trade of the week was to be long for targets ~ $68. These targets are met.
While we remain bullish, we expect some sideways action for a few days now that is likely to hold immediate Supports at 68-40/50. Best to buy near these levels with a closing stop below 68.
Supports and Resistances
Immediate resistance is the recent high at $ 71.28 /bbl. Further resistances for now are pegged in the $ 73 area.
Immediate supports are in the 69.50 area and then in the $ 68.40- 68.50 range.
For a more detailed review, please visit our Technical Views Page
Naphtha
Asia’s naphtha crack ended the week at $84.07 /MT, the highest since March 16, supported by squeezed supplies and strong demand. Although Asia has replaced some naphtha with cheaper liquefied petroleum gas (LPG) feedstock, fewer naphtha cargoes available for Asia from the West have created tighter supplies.
Unusual demand from India may also add to the overall supply tightness of naphtha. ONGC Mangalore Petrochemicals Ltd (OMPL) emerged on Thursday to seek a total of 105,000 tonnes of heavy naphtha for its paraxylene plant.
However, this does not appear to have made any impact on the April crack for Naphtha, which is steady at – $ 0.30 /bbl .
Gasoline
Asia’s gasoline crack recovered to $ 7.76/bbl on Friday, its highest level since Monday. Supplies are still seen as plenty.
ARA Gasoline stocks fell marginally to 1287 KT in the week ended 22 March. Stocks are 48% higher than last year.
China exported 870 KT of gasoline in February. This is down from 12.6 percent from January and the lowest since September
The April crack is marginally higher at $ 11.65 /bbl .
Distillates
Asia’s jet fuel price differentials climbed on Friday amid expectations of tightening supply due to refinery maintenance across the region ahead of an uptick in demand for the summer holiday season. Cash premiums for jet fuel rose to 36 cents a barrel to Singapore quotes, compared with 34 cents on Thursday. The front-month time spread also widened. Jet fuel prices will get a boost from India, the world’s fastest-growing aviation market, where a lot of airlines are increasing connectivity to include second-tier cities to cash in on some of the busiest routes.
Meanwhile, buying interest pushed up the cash differential of Asia’s 10ppm gasoil to 28 cents a barrel to Singapore quotes, from 25 cents on Thursday.
China’s monthly diesel exports fell to 1.04 million tonnes in February, the lowest since January 2017,
ARA Gasoil stocks rose slipped 0.9 percent to 2.95 million tonnes in the week to March 22, from 2.98 million tonnes in the previous week. ARA gasoil stocks were 2.7 percent lower compared to year ago levels, while jet fuel inventories were about 16 percent lower.
The April gasoil crack is higher at $ 14.40 /bbl with the 10 ppm crack at $ 15.05 /bbl. The regrade has slipped to $ 0.35 /bbl.
Fuel Oil
Asia’s 380-centistoke (cst) fuel oil cash differential narrowed its discount on Friday, rising from a near two-year low in the previous session, but was lower from last week as suppliers offered cargoes of the fuel at discounted prices. Cash discounts for 380-cst fuel oil rose to minus $1.24 a tonne to Singapore quotes, up from a discount of $1.94 per tonne in the previous session. By comparison, the week-ago cash differential of 380-cst fuel oil was at a narrow premium of 5 cents a tonne to Singapore quotes
ARA Fuel Oil inventories jumped by 214 KT to 939 KT. Still, ARA fuel oil inventories were 37 percent lower than year-ago levels and slightly below the five-year average of 1.074 million tonnes for this time of the year.
The April 180 cst crack has improved to -$ 5.75 / bbl with the visco spread steady at $ 1.30 /bbl
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.
Today’s status of active recommendations is below.
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.