Crude Oil
Oil prices climbed more than 1% on Friday ahead of long U.S. and UK holiday weekends, but posted the biggest weekly drop of the year. Brent crude futures rose 93 cents to settle at $68.69 a barrel. WTI gained 72 cents to settle at $ 58.63 a barrel.
For the week, Brent notched a decline of about 4.5%. WTI declined 6.4%, its steepest since December.
U.S. crude was pressured by climbing inventories, which are at their highest nationwide since July 2017. Economic worries fed by U.S.-China trade tensions have hit global markets, with the MSCI All Country index headed for a weekly fall exceeding 1%, its third week in the red.
Markets will be closed on Monday in Britain for the Spring Bank Holiday and in the United States for the long Memorial Day holiday weekend, start of summer vacation driving season. Motorist group AAA expects the second-highest Memorial Day weekend travel volume since it began keeping track in 2000.
U.S. energy firms this week reduced the number of oil rigs operating for a third week in a row as weaker oil prices encourage drillers to follow through on plans to cut spending. Drillers cut five oil rigs in the week to May 24, bringing the total count down to 797, the lowest since March 2018, Baker Hughes energy services firm said. That compares with 859 rigs operating during the same week a year ago.
Hedge funds and other money managers cut their bullish positions on U.S. crude futures and options in the week to May 21, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The move was the fourth consecutive decline in bullish positions
Naphtha
Asia’s naphtha crack fell for the fifth straight session on Friday to reach a 6-1/2 month low of $13.18 a tonne, a discount of steeper than $9 a barrel to Brent oil, on the back of a stubborn glut.
In view of the weak market, ADNOC’s offers for four of its naphtha grades scheduled for August 2019 to July 2020 at $16 to $20 a tonne premiums to its own price formula was considered high by many of its buyers..
The June crack is higher at – $6.65 /bbl;
Gasoline
No fresh news on the Gasoline market. Gasoline stocks in ARA rose by 135 KT to 937 KT.
The June crack is higher at 6.20 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s 10ppm gasoil margin ended the week at below $15 a barrel versus slightly above $15 a barrel in the previous day and more than $16 a year ago as ample supplies weighed on current crack value.
This has prompted some refiners to look into run cuts although middle distillates were doing much better than gasoline or naphtha.
ARA Gasoil stocks dropped by 92 KT to 2.56 million tonnes in the week to May 23.
The June crack for 500 ppm Gasoil is lower at $ 14.30 /bbl with the 10 ppm crack at 15.00 / bbl. The regrade is at -$ 0.40 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst barge crack discount to Brent crude was slightly narrower despite firmer benchmark crude oil prices on Friday, moving further away from a near eight-month low on Wednesday.
The June 380-cst barge crack to Brent crude was trading at about minus $8.70 a barrel on Friday, up from about minus $8.90 a barrel in the previous session.
Meanwhile, official storage data released showed fuel oil inventories in the ARA oil hub in Europe decreased by 92 KT to 2.56 million tonnes in the week to May 23.
The June180 cst crack is higher at – $ 1.80 / bbl with the visco spread at $ 1.90 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The fuel oil crack has once again strengthened on the basis of anticipation. We shall hedge the July crack at the value of -$ 1.35 /bbl
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.