Crude Oil
Crude prices once again rose as the market prepared for Hurricane Harvey. Brent rose by 37 cents to settle at $ 52.41 /bbl. WTI rose by 44 cents to settle at $ 47.87 / bbl.
Before we start commenting on the markets and the events of the weekend, we would like to hope that the people who have suffered the wrath of the hurricane are able to recover from the damage and have their lives restored to normal as soon as possible.
Crude Oil prices rose in the now familiar scenario of being long while preparing for a disaster. In addition, news late in the day that the Baker Hughes rig count fell for the second week in a row by 4 rigs helped prices stay high. However, crude oil prices ended lower this week as compared to last week with Brent losing 31 cents / bbl and WTI 64 cents / bbl.
According to Reuters, the Category 4 hurricane (i.e. stronger than was earlier expected) hit the Texas shore over the weekend causing massive flooding and knocking out 11% of the total manufacturing capacity of the US. It has also shut out a quarter of the production from the US Gulf of Mexico.
Analysts expect this to push prices upward as the US scrambles for products which are going to be short in the week to come. We have our reservations about this and would like to watch the scenario unfold rather than jump on the ‘be long or be wrong’ bandwagon.
Technical Analysis
The daily chart shows Brent just below the 200 DMA. The battle has been raging around this number with the 50 WMA acting as a strong support for the past 5 weeks. The candles still continue to be doji with the markets unclear about direction.
Supports lie at $ 51.78/bbl (the 50 WMA), $ 50.47 (the 100 DMA), $ 50.00 (psychological) and $ 49.74, the 50 DMA. Resistances lie at $ 52.24 (the 200 DMA), $ 53.14 a previous high and then $ 54.67 (May 22 high).
Naphtha
With approximately 22 % of the Gulf production idling because of Hurricane Harvey, U.S. traders are seeking to import oil product cargoes from North Asia to the United States. This has helped to strengthen naphtha cracks even though naphtha inventories held in Amsterdam-Rotterdam-Antwerp (ARA) storage and refining hub rose to a four-week high of 245,000 mt in the week to August 24.
The September crack is higher at $ 2.50 /bbl
Gasoline
Gasoline cracks have also strengthened as fears of supply disruptions in the US on account of Hurricane Harvey grip the market. Additionally, falling inventories across the US, Europe and Singapore have also kept gasoline prices well supported. Gasoline stocks held independently at ARA storage and refining hub fell to a four-week low of 878,000 MT in the week to August 24.
The 92RON crack for September is valued higher at $ 13.95/bbl
Distillates
Distillate cracks have risen amid arbitrage opportunities to ship cargoes to the West. Several vessels are heard to have been provisionally booked to ship ATF from South Korea to Europe and Diesel from Middle East and India to Europe. Also, inventories in ARA fell in the week to August 24 as demand for diesel cargoes in northwest Europe remained steady amid a slowdown in arrivals from the US Gulf Coast.
The September gasoil crack is higher at $ 13.90 /bbl. Regrade has improved to -$ 0.50 /bbl
Fuel Oil
Trading firm Mercuria continued its buying spree, picking up two of the three 380 cst cargoes traded in the Platts window on Friday. Mercuria, the top buyer of fuel oil cargoes in the window this month has now accumulated a total of 440,000 mt of fuel oil in August.
The Fuel oil cracks have managed to rise even though inventories continue to build in key trading hubs of Fujairah, ARA & Singapore. Fuel oil stocks at the ARA refining and storage hub jumped 27 % in the week August 24 which compared to the same time last year, is a whopping 30 % higher.
The 180 cst crack is valued at -$1.80 / bbl for September. The visco spread is unchanged at $ 0.65 /bbl.
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.
Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity