Crude Oil
Oil prices rose over 1% on Tuesday after Saudi Arabia said explosive-laden drones launched by a Yemeni-armed movement aligned to Iran had attacked facilities belonging to state oil company Aramco. Brent crude futures gained $ 1.01 to settle at $71.24 a barrel. WTI crude futures rose 74 cents to settle at $61.78 a barrel.
Saudi Arabia said armed drones had struck two oil pumping stations in the kingdom on Tuesday in what it called a “cowardly” act of terrorism two days after Saudi oil tankers were sabotaged off the coast of the United Arab Emirates. U.S. national security agencies said they believe proxies sympathetic to or working for Iran may have been responsible for the tanker attacks rather than Iranian forces themselves. Iranian officials denied responsibility.
Iran has category denied all the charges and has further said that there will be no war with the US, in a significant de-escalation of rhetoric emanating from the region.
The market was also holding out some hope for U.S.-China trade talks as both sides expressed positive sentiments, which may signal the negotiations are not yet dead. The talks appeared headed towards success last week but have largely unravelled over U.S. accusations that Beijing sought vast, last-minute changes. China on Monday ignored a warning from U.S. President Donald Trump and moved to impose higher tariffs on a range of U.S. goods including LNG.
In the meanwhile, India has told Iran on Tuesday that it will decide on its oil imports after elections end this month, in line with its economic interests, a government source said. Iran’s Foreign Minister Javad Zarif held talks on the issue with his Indian counterpart Sushma Swaraj during a visit to New Delhi
aPI Data
The API report was distinctly bearish with not only crude stocks showing a huge build against an expected draw, but product stocks also building. Markets will wait for official data to confirm the news even though early signs seem to suggest a drop in prices for the day.
Naphtha
Asia’s naphtha crack fell to three-month low of $33.90 a tonne as high supplies countered demand.
Refineries mostly processing lighter grades of crude was one of the factors contributing to more light distillates in the market. The recent high exports of naphtha from the West, including Europe and the United States, also contributed to the bearish petrochemical feedstock market.
Demand was mostly muted following deals from Japan’s Idemitsu Kosan and Hanwha Total on Monday
The May crack is lower at – $ 7.80 /bbl. The June crack is at – $6.60 /bb;
Gasoline
Asia’s gasoline margin was at a three-session low of $4.47 a barrel, down from a five-session high of $4.89 a barrel on Monday.
The May crack is lower at $ 4.55 / bbl. The June crack is at 5.20 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s benchmark 10ppm gasoil margin and jet fuel crack were each at a 1-1/2 week low of $14.12 a barrel and $13.30 a barrel respectively as high supplies weighed. These together with falling gasoline, naphtha and fuel oil cracks have dragged refiners’ margins to below $2 on Tuesday for the first time since Jan. 30.
Gasoil cash deals remained absent for the second day while a jet deal resumed for the first time since May 6. Outside of Asia, demand for diesel was seen weak in the Mediterranean Basin.
The May crack for 500 ppm Gasoil is lower at $ 12.40 /bbl with the 10 ppm crack at 13.05 / bbl. The regrade has fallen to -$ 0.45 /bbl
The June crack for 500 ppm Gasoil is at $ 13.85 /bbl with the 10 ppm crack at 14.50 / bbl. The regrade is at -$ 0.15 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Weighed down by sluggish bunker fuel demand and ample supplies, Asia’s front-month time spread slipped to a two-week low on Tuesday.
The June/July 380-cst time spread slipped to $1.50 a tonne, down from $2.25 on Monday and its lowest since April 30.
The May 180 cst crack is lower at – $ 5.90 / bbl with the visco spread at $ 1.90 /bbl.
The June180 cst crack is at – $ 4.65 / bbl with the visco spread at $ 1.60 /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.