Crude Oil
Oil prices had a roller coaster ride in the last two hours of trading before finishing only marginally changed for the day. Brent crude futures dipped 20 cents to settle at $72.61 a barrel. WTI futures eased 43 cents to $67.20 a barrel.
Earlier in the day prices tanked with Brent hitting a low of $71.05 a barrel after inventories at the Cushing, Oklahoma delivery hub for WTI rose by about 1.7 million barrels in the week through Aug. 10. The Canadian Syncrude processing facility has begun ramping up light oil production and was expected to return to full production in September.
The Organization of the Petroleum Exporting Countries forecast lower demand for its crude next year as rivals pump more and said top oil exporter Saudi Arabia, eager to avoid a return of oversupply, had cut production. In a monthly report, OPEC said the world will need 32.05 million bpd of crude from its 15 members in 2019, down 130,000 bpd from last month’s forecast.
In the meanwhile, macroeconomic data from China failed to meet market expectations which could be another signal that world economy is slowing down.
Naphtha
Asia’s naphtha physical crack for the second half of September on Monday recovered from a three-week low hit the previous session with markets saying last week’s fall was too rapid despite upcoming maintenance at crackers.
The current weaker premiums may limit the amount of cargoes coming to Asia from the West, including from Europe and the Mediterranean, and this could affect supplies on the flip side. Naphtha physical crack for second half September rose by 2.14 percent to $101.68 a tonne. Asia is structurally short of naphtha and depends on the Middle East for most of its supplies with the rest provided by the West.
The August crack has dropped to – $ 0.10 /bbl. September is at -$ 0.50 /bbl
Gasoline
Asia’s gasoline crack rose for the fifth straight session to reach $8.94 a barrel, the highest since May 28 this year, driven up by strong cash demand in the Singapore market.
The balance August crack has increased to $ 10.00 / bbl. The September crack is at $ 9.20 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s jet fuel crack stayed above $15 a barrel for the second session on Monday, lifted by higher oil prices and strong demand for air travel. But the cash differential to Singapore jet fuel benchmark prices has been weak as supply outstripped demand. The cash differential is an indicator of the fundamentals and a discount typically means that supplies are in excess. One jet fuel cash deal changed hands in the Singapore market – the first deal for this month. The most recent deal was recorded on July 30. BP sold Hin Leong a cargo for Aug. 28 to Sept. 1 loading at a discount of 30 cents. This contrasted the deal done on July 30 when Hin Leong sold Vitol a cargo at a premium of 30 cents.
Japan’s Cosmo Oil Co has restarted a 100,000 barrels-per-day (bpd) sole crude distillation unit (CDU) at its Sakai refinery following a shutdown since July because of a problem
The balance August crack is steady at $ 15.25 / bbl with the 10 ppm crack at $ 16.15 /bbl. The regrade has dropped to $ -0.10 /bbl.
The September crack is at $ 15.10 / bbl with the 10 ppm crack at $ 16.00 /bbl. The regrade is at $ 0.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Time spreads and cash premiums of Asia’s 380-cst fuel oil slipped on Monday albeit on limited trade activity in the paper and physical markets. The 380-cst Sept/Oct time spread was trading at about $5.75 a tonne by Asia close, down from $6 a tonne on Friday. Cash premiums for physical cargoes of the fuel were also lower on Monday at $5.92 a tonne to Singapore quotes, down from $6.25 a tonne on Friday.
Sales of marine fuels in Singapore during July rebounded 3 percent from a one-year low in the previous month to 4.036 million tonnes as more ships called for refueling at the world’s largest bunkering hub. However, the July volume was 8.1 percent lower compared to the year-earlier levels when 4.394 million tonnes were sold, the third-highest monthly volume on record.
The balance August 180 cst crack has dipped to -$ 1.50 / bbl with the visco spread at $ 0.90 /bbl.
The September180 cst crack is at -$ 2.30 / bbl with the visco spread at $ 1.20 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Cal 19 Distillate cracks are once again rising. Should Jet and Gasoil 10 ppm cracks cross $ 18.00 / bbl, we shall reinstate hedges. We will now refrain from hedging 500 ppm cracks since they are likely to become increasingly illiquid going forward.
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.