Crude Oil
Crude oil futures ended the day lower after the DOE confirmed a build in crude stocks. The Brent June crude futures contract, which becomes the front contract from Monday settled 70 cents lower at $68.76 /bbl. The May future, which expires today settled 58 cents lower at $ 69.53/bbl. WTI futures dropped 87 cents to to settle at $64.38/bbl.
In other news, Colombia reported that crude production fell 4.7% y/y to 864 kbpd in February. Production has been affected by infrastructure attacks by rebel groups, and also protests by local communities in three of its most productive fields – Castilla, Chichimene and Acacias.
The US Department of energy confirmed yesterday that Crude Oil stocks in the US had increased, albeit by a lower volume of 1.6 million barrels. The change in stocks can be seen below
However, the DOE also reported significant draws in both gasoline and distillates.
A crude build of 1.5 million barrels at Cushing, was the primary cause for the drop in WTI prices. However, US stocks are now well below the 5 year average.
The draw in products inspite of refinery runs being at a 10 year seasonal high of 92.0% should be heartening to bulls. However, it is difficult to reconcile this draw with the material balance figures shown below
The drop in gasoline demand is significant. What is also of note is the healthy growth in distillate demand. Global distillate stocks are
Naphtha
Asia’s naphtha crack hit a nine-week high of $88.63 /MT on Wednesday reflecting the strong demand.
Cash premia for 1st half May delivery are now at $ 12- 12.50 /MT over CIF Japan quotes.
The April crack for Naphtha has improved to $ 0.00 /bbl flat.
Gasoline
Asia’s gasoline crack rose to $ 7.79/bbl on Wednesday. Asia’s Naphtha and Gasoline stocks rose to an all time high of 15.64 million barrels last week. Oversupply coupled with weak demand has prompted European trader Vitol to store gasoline aboard ships off the Singapore coast. This is the first time since 2016 that gasoline has been seen being kept aboard ships in Singapore.
Light Distillate inventory in Fujairah also rose to a four week high of 8.2 million barrels in the week to Mar 26. Global Light distillate inventories are extremely comfortable. To see them at a glance take a look at our new Global Gasoline Stocks page
The April crack has also improved to $ 11.90 /bbl .
Distillates
Asia’s cash differentials for jet fuel and 10ppm sulphur gasoil climbed on Wednesday amid steady demand, while inventories for middle distillates dropped in Singapore as well as in the Fujairah Oil Industry Zone (FOIZ).
Cash premiums for jet fuel increased to 42 cents a barrel to Singapore quotes, compared with 37 cents on Tuesday. Exports for jet fuel and gasoil from China have remained weak during January-February despite the country raising export quotas for 2018.
Meanwhile, the cash differential of Asia’s 10ppm gasoil rose to 42 cents a barrel to Singapore quotes, up from 35 cents on Tuesday. Middle distillates inventories in the Fujairah Oil Industry Zone (FOIZ) fell about 14 percent from a week ago to 2.2 million barrels in the week ended March 26. Singapore onshore middle distillate stocks dropped 7.5 percent to 9.8 million barrels in the week to March 27
Global Distillate stocks appear to be tightening. See our new Global Distillate Stocks page for a quick confirmation of the same.
The April gasoil crack is higher at $ 15.40 /bbl with the 10 ppm crack at $ 16.10 /bbl. The regrade is steady at $ 0.35 /bbl.
Fuel Oil
Asia’s front-month high-sulphur fuel oil crack pulled back from a near seven-month low in the previous session amid falling stocks of the fuel across key storage hubs and weaker crude oil prices. The April 180-cst fuel oil crack to Brent crude was at about minus $9.27 a barrel on Wednesday, compared with minus $9.62 a barrel on Tuesday, its lowest since Aug. 12
Singapore weekly onshore fuel oil inventories fell by 2.529 million barrels to a five-week low of 21.691 million barrels in the week ended March 27
The 380-cst April/May time spread was trading at about 5-10 cents a tonne around 5:30 pm Singapore time (0930 GMT).
The April 180 cst crack has dropped to -$ 6.45/ bbl with the visco spread steady at $ 1.40 /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.