Oil prices surged more than 10% on Wednesday after U.S. crude stockpiles grew less than expected and gasoline posted a surprise draw.
Brent futures settled $2.08 higher at $22.54 /bbl. WTI rose $2.72 to settle at $15.06 /bbl.
Regulators in Texas, the biggest U.S. oil producing state, will vote on May 5 whether to enact output cuts. Officials in North Dakota and Oklahoma are also examining possible cuts. That would add to production curbs of almost 10 million bpd agreed by the OPEC+ group.
Prices also got a boost from hopes for a demand recovery as European countries including France and Spain, along with several U.S. states planned to lift some lockdown restrictions soon.
Norway will slash its output by 250 KB/D in Jun’20 and by 134 KB/D in 2H’20, with the start-up of several fields delayed to 2021, the oil and energy ministry said on Wednesday. The Norwegian cuts are made from a reference point of 1.859 MB/D.
US buyers of Saudi Arabian crude oil cancelled at least seven Apr’20-loading tankers after a jump in freight costs, two industry sources said, likely to result in lower-than-expected shipments from the world’s top exporter.
China’s factory activity unexpectedly shrank in Apr’20, with the Caixin/Markit Manufacturing PMI falling to 49.4, from Mar’20’s expansionary 50.1, as the coronavirus pandemic shattered global demand, causing a substantial drop in export orders and more layoff.
India’s electricity demand during the current financial year is seen falling for the first time in at least 36 years, ratings agency Moody’s unit ICRA said on Wednesday, expecting annual electricity demand to fall 1% during the year ending Mar’21.
U.S. crude oil inventories swelled by 9 million barrels last week to 527.6 million barrels, about 7 million barrels below their record high, the EIA said. The data included a notable draw down in U.S. gasoline stockpiles of 3.7 million barrels. Gasoline demand over the past four weeks remained down 44% from a year earlier, but the draw down suggested consumption declines may be leveling off.
In these volatile times, discrepancy with our material balance statement remains significant.
At a global level, the death toll from the COVID-19 virus rose to 228,030 (+6,593 DoD) yesterday, with the total number of confirmed infections at 3,218,184 (+81,678 DoD). (Click here for details).
Asia’s naphtha crack was at a six-session low of $35.90 a tonne.
The May crack has recovered to -$1.00 / bbl.
Asia’s gasoline discount to Brent crude was at its narrowest in more than a month on Wednesday on hopes that demand would pick up.
The benchmark 92-octane gasoline crack was at a discount of $1.43 a barrel its narrowest since March 18, improving from Tuesday’s discount of $1.71 and a discount of more than $13 from just two weeks ago.
The May crack has recovered sharply to -$0.85 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for jet fuel widened to $4.47 a barrel to Singapore quotes on Wednesday, compared with $4.38 per barrel a day earlier.
The front-month time spread for jet fuel in Singapore traded at a discount of $3.64 a barrel on Wednesday, compared with $3.20 on Tuesday.
Cash discounts for 10 ppm gasoil were at a discount of $1.91 per barrel to Singapore quotes on Wednesday, compared with a discount of $1.99 a barrel on Tuesday.
Middle-distillate inventories in Fujairah rose 16% to 4.1 million barrels in the week to April 27, data via S&P Global Platts showed. Stocks of middle distillates in the Fujairah oil hub have averaged 3.1 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019. The weekly Fujairah middle distillate stocks have more than doubled as compared with a year earlier.
The May crack for 500 ppm Gasoil has recovered to $3.40 /bbl with the 10 ppm crack at $ 5.60 / bbl. The regrade is at -$ 6.40 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash discounts for 180-cst and 380-cst HSFO cargoes widened on Wednesday amid lower deal values and weak buying interest in the Singapore trading window. Cash discounts for 180-cst HSFO fell to minus $8.33 a tonne to Singapore quotes while 380-cst HSFO discounts were at $6.88 a tonne.
Fuel oil stocks held in the Fujairah oil hub fell for a third consecutive week in the week to April 27, widening the gap from a record high at the start of April. Inventories for heavy distillates and residues fell 4% from the previous week to a seven-week low of 13.063 million barrels in the week to April 27, data via S&P Global Platts showed. Weekly fuel oil inventories at FOIZ were 11% higher, compared with year-earlier levels. Fuel oil stocks at FOIZ have averaged at 12.98 million barrels this year, compared with a weekly average of 10.82 million barrels in 2019.
The May crack for 180 cst FO is steady at -$3.35 /bbl with the visco spread at $1.05 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No fresh action for 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.
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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.