Crude Oil
Oil prices retraced on Thursday giving up all the gains of the previous day and some more as there appeared to be no further bullish impetus. Brent crude lost $ 1.71 to settle at $84.58 a barrel. WTI crude futures lost $ 2.07 to settle at $74.33 a barrel.
Yesterday’s loss does not take out the fundamentally bullish sentiment in the market as it awaits the impact of the impending sanctions on Iran.
The base reasons for rise in prices can be said to be threefold viz. the OPEC+ choking of excess supply, the US’s proposed sanctions on Iran and speculators reacting to the same. The fourth, and arguably only genuine reason for prices to rise would be economic growth increasing consumption and demand.
The sense is that in the absence of any easing of the first two factors, speculators will raise prices and test the level at which the economy breaks down. The lopsided difference between speculative longs and shorts is also pretty close to the record levels of earlier this year.
The US State Department yesterday took the unusual step of issuing a statement calling on OPEC to boost output by tapping into spare capacity. In addition, the department estimated spare capacity to be 1.4 mb/d in the group. The Saudi Energy Minister also confirmed that the cartel’s spare capacity remains at roughly 1.3 mb/d.
India has cut gasoline and diesel retail prices and lowered excise taxes by $0.02/liter.
Naphtha
Asia’s naphtha crack sank by 12.8% to $91.60 a tonne, the lowest since Sept. 13, weighed down by the persistently high oil prices. Japan’s Fuji Oil is expected to restart its sole 143,000 barrels-per-day (bpd) crude distillation unit (CDU) at its Sodegaura refinery later on Thursday after a power blackout caused by typhoon Trami.
The October crack is lower at -$ 2.35 /bbl
Gasoline
Asia’s gasoline crack tumbled 18.61 percent to $5.73 a barrel, the lowest since July 18 as European cargoes were seen coming to Asia.
Singapore’s onshore light distillates stocks, which comprise mostly gasoline and blending components for petrol, were at their lowest since Nov. 29, 2017 after stockpiles eased by 551 KB to 11.3 million barrels in the week to Wednesday.
The October crack plummeted further to $ 7.00 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10ppm gasoil fell to 54 cents a barrel to Singapore quotes on Thursday, compared with a premium of 68 cents a barrel on Wednesday. The Oct/Nov time spread narrowed to 90 cents a barrel on Thursday, from $1.32 a day earlier.
Meanwhile, cash discounts for jet fuel were at 62 cents a barrel to Singapore quotes, compared with a discount of 77 cents a barrel on Wednesday.
Singapore onshore middle distillate stocks rose 6.1 percent in the week to Oct. 3 to 10.7 million barrels. Overall, onshore middle distillate inventories were 0.5 percent higher than a year ago. This is the first time this has happened this year.
The October crack has dropped to $ 15.45 / bbl with the 10 ppm crack at $ 16.25 /bbl. The regrade is higher at -$ 0.90 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst barge fuel oil crack firmed on Thursday, as concerns about lower Iranian fuel oil supplies from next month with U.S. sanctions coming into effect added to worries of fewer arbitrage volumes into Asia. The crack discount was at about minus $10.70 a barrel to Brent crude on Thursday, compared with around minus $11.15 a barrel in the previous session.
Singapore onshore fuel oil stocks fell marginally by 52 KB in the week to Oct. 3 to 17.56 million barrels. Fuel Oil stocks are still at seasonal lows.
The October 180 cst crack is stronger at -$ 2.95 / bbl with the visco spread at $ 0.95 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Cal 19 distillate cracks continue to recede but are still extremely strong.
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.