Crude Oil
Oil prices gained more than 2 percent on Tuesday after the United States imposed sanctions on state-owned Venezuelan oil company PDVSA, a move likely to reduce the OPEC member’s crude exports and relieve some global oversupply worries. Brent crude oil futures rose $1.39 to settle at $51.32 a barrel, while WTI crude futures rose $1.32 to settle at $53.31 a barrel.
The impact of the sanctions could be far reaching as Venezuela is among the world’s largest heavy crude oil producers. Venezuela’s exports fell to little more than 1 million barrels per day (bpd) in 2018 from 1.6 million bpd in 2017. Venezuelan exports will drop by about 500,000 barrels per day under current conditions.
Russia, OPEC’s biggest non-member ally, and China have both publicly denounced the U.S. sanctions.
Meanwhile, Libya’s biggest oilfield, El Sharara, will remain shut until departure of an armed group occupying the site, the head of National Oil Corp said.
API Data
U.S. crude stockpiles rose by 1.1 million barrels last week compared with analysts’ expectations for an increase of 3.2 million barrels. Gasoline stocks also rose much less than expected. We do not read too much bullishness in this since the expectations were much higher than are normally recorded by analysts.
Naphtha
Asia’s open-specification naphtha price for first-half March was $6.50 a tonne higher versus first-half April on Tuesday, the widest inter-month premium in more than five months due to healthy demand.
Since last week, buyers have been snapping up cargoes for March delivery. Although there are naphtha crackers in South Korea going into maintenance either in March or April, its overall cracking capacity would be raised as LG Chem and Hanwha Total are increasing their crackers’ throughput.
The February crack has improved slightly to -$ 6.10 /bbl.
Gasoline
Asia’s gasoline crack persisted at weak levels, hitting a discount of $2.51 a barrel to Brent crude, the lowest in more than seven years as high supplies were seen across regions of Asia, the United States and Europe. This is the third time in a week the gasoline crack has touched its lowest since 2011.
The February crack has dropped to -$ 1.60 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil widened to 35 cents a barrel to Singapore quotes on Tuesday, compared with a discount of 30 cents on Monday.
Asian gasoil exports to Europe and West Africa were expected to surge in the coming weeks as quite a few tankers were set to carry diesel towards the West.
Cash discounts for jet fuel narrowed by 4 cents to $1.69 a barrel to Singapore quotes, compared with $1.73 per barrel a day earlier.
The February crack has improved to $ 13.35 /bbl with the 10 ppm crack at $14.30 /bbl. The regrade is higher at $ 0.80 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high-sulphur fuel oil market was largely steady on Tuesday amid a few changes in market fundamentals this week. Despite expectations of lower arbitrage supply in February into Singapore versus January, there is no perceived shortage of fuel oil supplies for the current demand.
The February 180 cst crack has jumped to $ 0.50 / bbl with the visco spread at $ 0.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Fuel oil cracks have really jumped today giving us the opportunity to lay on somme more hedges. We will add a hedge for March 19 at +0.50 / bbl and for April at +0.15 / bbl
The Cal 20 distillate cracks have risen as well. We will hedge Jet at levels in excess of $ 20 /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 refiner.
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.