Crude Oil
Oil prices were mostly steady on Friday as markets watched the US – China trade talks. Brent crude futures settled at $70.62 a barrel, 39 cents higher. WTI crude futures fell 4 cents to settle at $61.66 a barrel.
Both Brent and WTI the week slightly lower, 0.4% and 0.5% respectively as trade tensions stoked by a U.S. move to hike tariffs on Chinese goods overshadowed the market.
After a volatile week, investors were worried over the possibility of a protracted and bitter U.S.-China trade war, despite last-minute efforts to salvage a deal. U.S. President Donald Trump on Friday said he was in no hurry to sign a trade deal with China as Washington imposed a new set of tariffs on Chinese goods and negotiators ended a second day of talks.
U.S. energy firms reduced the number of oil rigs operating for the third time in four weeks even as crude production forecasts increase despite some drillers cutting spending. Drillers cut two oil rigs in the week to May 10, bringing the total count down to 805, Baker Hughes said in its closely followed report on Friday. That put the U.S. rig count, an early indicator of future output, below the 844 drilling a year ago.
Production at Norway’s Oseberg oil and gas field, whose crude is a part of global oil benchmark Brent, is expected to remain shut for eight days, longer than previously anticipated, the company said on Friday. Production at the field was shut on Wednesday as a precautionary measure due to problems with fire water pumps at offshore installations, and the shutdown was expected to last for five days.
Naphtha
Asia’s naphtha crack ended the week at a three-month low of $37.55 a tonne, under pressure from plentiful supplies.
The weak fundamentals flipped premiums in South Korea into discounts for the first time since December.
Naphtha stocks in ARA were at a six-week high of 278 KT.
while
The May crack is lower at – $ 6.90 /bbl. The June crack is at – $5.95 /bb;
Gasoline
Asia’s gasoline crack rose to a four-session high of $4.69 a barrel, tracking the stronger European market following a dive in inventories.
Gasoline stocks in ARA plunged 17.8 percent in the week to Thursday to reach an eight-month low of 847 KT, data from Dutch consultancy Insights Global showed.
Despite the stronger gasoline crack, the overall distillates crack values are dragging on Asia’s refining margins.
The May crack is higher at $ 5.25 / bbl. The June crack is at 5.65 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil were at a discount of 13 cents a barrel to Singapore quotes on Friday, as against an 11 cent discount on Thursday.
The May/June time spread for the benchmark gasoil grade widened its contango structure by 2 cents to a discount of 21 cents a barrel on Friday.
Gasoil Stocks in ARA decreased by 108 KT to 2.63 million tonnes.
Cash discounts for jet fuel narrowed to 46 cents a barrel to Singapore quotes on Friday, compared with Thursday’s discount of 51 cents, the widest since early February.
The May crack for 500 ppm Gasoil is higher at $ 12.80 /bbl with the 10 ppm crack at 13.50 / bbl. The regrade has improved to -$ 0.15 /bbl
The June crack for 500 ppm Gasoil is at $ 14.15 /bbl with the 10 ppm crack at 14.80 / bbl. The regrade is at -$ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month time spread was bid higher on Friday despite a large build in Singapore fuel oil inventories this week.
The June/July 380-cst fuel oil time spread climbed to a three-session high of $2.75 a tonne on Friday, up from $2 per tonne in the previous session but was unchanged from the premium it set at the start of the week.
The gains may reflect expectations of increasing seasonal demand for fuel oil typically seen in the Middle East over the summer months amid rising power demand for cooling.
Fuel oil inventories in ARA fell by 72 KT to 854 KT.
The May 180 cst crack is lower at – $ 3.15 / bbl with the visco spread at $ 1.75 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to report today.
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.