Crude Oil
Oil prices jumped more than 2% on Thursday following a report that the United States could postpone tariffs on Mexico. Brent crude futures settled at $61.67 a barrel, gaining $1.04. WTI crude futures settled at $52.59 a barrel, up 91 cents.
The benchmarks both rallied more than 2% in post-settlement trade. U.S. stocks, which oil prices tend to follow, spiked after Bloomberg News reported the United States is considering a delay in the tariffs as talks continue. Prices had been near flat most of the session as sentiment remained dim on fresh signs of a stalling global economy.
Signals of slowing global economic activity have increased in recent months, fueled by trade tensions between the United States and China, the world’s top two energy consumers. U.S. President Donald Trump, in his latest public comments about the trade war, said he would likely decide on more China tariffs at the end of June, which followed his overnight threat to put tariffs on “at least” another $300 billion worth of Chinese goods.
President Vladimir Putin said on Thursday that Russia had differences with OPEC over what constituted a fair price for oil but said Moscow would take a joint decision with OPEC colleagues on output at a policy meeting in the coming weeks.
Naphtha
Asia’s naphtha physical crack flipped to a discount for the first time in a decade on Thursday, battered by ballooning supplies and outages in crackers which choked off demand. Benchmark open-specification naphtha margin hit a discount of $5.48 a tonne to Brent crude, the lowest since January 2009.
Cracker outages in Japan and South Korea have depressed demand recently as they came amid the cracker maintenance season which had already reduced buying interest. Growing supplies of alternative liquefied petroleum gas (LPG) feedstock made the situation worse for naphtha sellers as buyers have a cheaper option.
Open-specification naphtha sold into Taiwan and South Korea in late May were already at discount levels. Heavier grades were still holding at premium levels, with South Korea’s SK Energy and Hanwha Total each paying a high single premium for heavy full-range naphtha this week for second-half July delivery.
Naphtha remains the worst-performing oil product for refiners in terms of margins.
The June crack has collapsed to – $9.05 /bbl;
Gasoline
No fresh news in the gasoline markets. Light Distillate stocks in Singapore rose by 217 KB to 11.47 million barrels.
The June crack is higher at $ 3.95 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil remained unchanged at a discount of 15 cents a barrel to Singapore quotes.
The June/July time spread for the benchmark gasoil grade in Singapore narrowed its contango structure to a discount of 5 cents per barrel on Thursday, as against 10 cents on Tuesday.
Cash differentials for jet fuel flipped back to a discount of 6 cents a barrel to Singapore quotes on Thursday, compared with a premium of 2 cents a barrel on Tuesday.
Middle Distillate stocks in Singapore fell by by 856 KB to 11.09 million barrels.
The June crack for 500 ppm Gasoil has crashed to $ 12.15 /bbl with the 10 ppm crack at $ 13.85 / bbl. The regrade is at +$ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s cash premiums for mainstay 380-cst high-sulphur fuel oil rose on Thursday to their highest in nearly three months, buoyed by expectations of tightening supplies and firmer buying interest in the physical market.
Cash premiums for 380-cst high-sulphur fuel oil (HSFO) were at $2.89 a tonne to Singapore quotes, the strongest since March 11. Premiums were at $1.24 per tonne on Tuesday.
The region’s 180-cst fuel oil crack to Dubai crude rose to 20 cents a barrel on Thursday, up from a discount of 14 cents per barrel on Tuesday.
The more actively-traded 380-cst barge crack to Brent crude for July inched lower to minus $6.72 a barrel during Asian trading hours, compared with minus $6.28 a barrel on Tuesday.
Fuel Oil stocks in Singapore rose by 404 KB to 22.19 million barrels.
The June180 cst crack has jumped up to $ 0.25 / 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 for 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.