Crude Oil
Brent moved surprisingly higher on Wednesday notwithstanding definitely bearish data released by the DOE. Brent rose 23 cents to settle at $ 79.80 /bbl. West Texas Intermediate crude fell 36 cents to $ 71.86 /bbl.
We are unable to find any news that could explain the rise in Brent prices. However, the last 30 minutes of trade saw strong buying pushing prices at least 50 cents higher. This is all the more puzzling as it happened after the DOE published
Meanwhile, the dollar firmed to nearly a five-month high against a basket of other major currencies on Wednesday.
The DOE reported a build of 5.8 million barrels of crude this week. This was far more bearish than the markets, who were predicting a draw, expected. Gasoline stocks also built by 1.9 million barrels, once again contrary to market expectations of a draw. While distillate stocks did draw, this was much less than market expectations.
While refinery runs increased to 91.8%, gasoline as well as distillate production dropped in an inexplicable fashion. The crude build was caused by a double whammy of an increase in imports of 558 kb/d combined with a decrease in exports of 818 kb/d. The material balance report suggests that this build should be higher than the number actually reported.
The gasoline build too can be explained by a decrease in exports. It may have been higher were it not for a good increase in demand to 9.6 mb /d.
Distillate stocks continue their decline and now are at the lowest level for this time of the year. This is the only commodity which we are bullish about going forward.
Click Here for a graphical depiction of Global Gasoil stocks by region.
Naphtha
Asia’s naphtha crack eased marginally yesterday to $114.63, but fundamentals stayed firm. Cash premia for supplies in South East asia are prevailing at mid teens to MOPJ quotes.
The June crack is lower at $ 0.15 / bbl
Gasoline
Asia’s gasoline crack also eased to $9.65 a barrel. However, demand stays firm with both Pertamina and an Indian Public Sector refiner seen in the market to buy cargoes.
Light distillate stocks in Fujairah rose by 434 KB to 7.5 million barrels. This is 25% higher than the level last year.
The June crack has dropped to $ 11.75 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums and the front-month time spread of Asia’s jet fuel market weakened on Wednesday amid limited spot demand for the fuel. Increased production of the fuel as refiners return from scheduled maintenance also weighed on Asia’s jet fuel market. However, the market could find support from the region’s steady demand for aviation fuels in the summer months. Jet fuel cash premiums were at 20 cents a barrel to Singapore quotes, their lowest since Tuesday last week and down from a premium of $1.12 a barrel at the start of the month.
Middle distillate stocks in Fujairah rose by 159 KB to 2.7 million barrels. This is about 6% lower than the level last year. This has been the 4 th consecutive week of increase in stocks in Fujairah.
The June crack is weaker at $ 15.45 / bbl with the 10 ppm crack quoting higher at $ 16.40 /bbl. The regrade has also jumped to $ 0.65 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst and 180-cst fuel oil cash premiums edged higher on Wednesday amid stronger buying interest for fuel oil cargoes in the Singapore trading window. The 380-cst fuel oil cash premiums were at a three-session high of $2.42 a tonne to Singapore quotes on Wednesday, up from $2.28 per tonne in the previous session and $1.71 a tonne on Monday..
Heavy distillate stocks in Fujairah rose by 1.34 million barrels in to 9.2 million barrels. This is just higher than the level last year.
The June 180 cst crack is lower at -$ 3.90 / bbl. The visco spread has narrowed to $ 1.50/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Our 2019 positions for Gasoil and Jet seem to be improving slightly. as Gasoil eases in the prompt. However, 2019 is far away and anything could happen.
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.