Crude Oil
Oil prices crashed on Wednesday as US crude and product inventories surged. Brent crude futures fell $1.34 to $ 60.63 a barrel. WTI crude futures settled $ 1.80 cents lower at $ 51.68 a barrel.
The impact of the build on sentiment was so high that Brent pierced the $ 60/bbl level briefly before recovering in sync with equity markets. Oil prices won some respite after a global stock market rally on hopes the Fed may trim interest rates. Equities extended gains on Wednesday.
doe data
U.S. crude, gasoline and distillate stocks all rose last week, the DOE said on Wednesday.
Crude inventories rose 6.8 million barrels, compared with analyst expectations for a small draw, to their highest since July 2017 and about 6% above the five year average for this time of year. A surge in imports and an increase in domestic production boosted inventories. Net U.S. crude imports rose last week by 1.1 million barrels per day, while crude production added another 100,000 bpd to a new peak at 12.4 million bpd,
The rise in refinery runs has paled in comparison to the jump in imports, particularly waterborne imports to the Gulf and West Coasts. Product inventories have risen mainly due to failure of demand to keep up with production. Gasoline demand has not significantly increased in the first week of the driving season while distillate demand dropped by close to 900 kb.
Our material balance statement seems to be fairly in agreement with the reported stocks .
Naphtha
Asia’s naphtha crack for benchmark open-specification naphtha returned to a near seven-year low on Tuesday for the second time since May 31 as ample supplies and weaker demand weighed.
The front-month crack for the second half of July hit $5.18 a tonne, its lowest since June 13, 2012, when it was at $3.20 a tonne.
Weaker demand recently in South Korea and China had offset buying interest from Singapore. South Korea’s May naphtha imports fell by 900,000 tonnes compared with April while China’s imports last month dropped by more than 400,000 tonnes month on month.
The June crack has improved to – $8.05 /bbl;
Gasoline
No fresh news in the gasoline markets. Gasoline stocks in Fujairah dropped for the 3rd time in 4 weeks to 9.8 million barrels.
The June crack is higher at $ 3.85 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil widened their discounts to 15 cents a barrel to Singapore quotes, compared with a 2-cents discount on Monday.
However, cash differentials for jet fuel were at a premium of 2 cents a barrel to Singapore quotes, compared with a discount of 8 cents a barrel on Monday.
The June crack for 500 ppm Gasoil is lower at $ 12.85 /bbl with the 10 ppm crack at $ 13.55 / bbl. The regrade has flipped into positive territory and is now +$ 0.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asian fuel oil refining margins slipped on Tuesday, while cash premiums for mainstay 380-cst high-sulphur fuel oil dropped to their lowest in about a week, hurt by weaker buying interest in the Singapore physical market.
The more actively-traded 380-cst barge crack to Brent crude dipped to minus $6.87 a barrel during Asian trading hours. It was at minus $6.66 per barrel on Monday.
Asia’s 180-cst fuel oil crack to Dubai crude for March was at minus 65 cents a barrel during Asian trade on Tuesday, compared with minus 30 cents a day earlier.
Cash premiums for 380-cst HSFO fell to $1.24 a barrel to Singapore quotes, the lowest since May 29. The premiums were at $1.80 per barrel a day earlier.
The 380-cst June/July time spread was trading at about $3.50 a tonne, down from about $3.75 a tonne in the previous session.
The June180 cst crack has jumped up to flat $ 0.00 / bbl with the visco spread at $ 1.75 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The Cal -19 cracks seem to have come off quite a bit allowing us to close a couple of positions there.As the July FO crack has gone into a premium, we will hedge a tranche at current levels of 0.60 For now, our eyes will remain on the August crack flipping into a premium.
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.