Crude Oil
Oil prices fell on Friday as investors took profit at the end of the quarter and awaited direction from the G-20 summit in Japan. The Brent Sepemtber future fell 93 cents to close at $ 64.74 / bbl. The expiring Brent August future settled unchanged at $ 66.55/bbl. WTI crude futures fell 96 cents to settle at $58.47 a barrel.
Brent posted a gain of more than 20% in the first half of 2019, while WTI marked a gain of more than 25%. Both contracts also notched their second straight weekly gain.
U.S. President Donald Trump and Chinese President Xi Jinping agreed to resume trade talks after the former pledged not to put more taxes on Chinese goods. President Trump also said that US companies could continue to sell products to Huawei. China, on its part, has agreed to purchase more agricultural goods from the US. Trump also said that he was in no hurry to secure a deal and would take his time to get the best deal. For now, the present levels of tariffs remain unchanged.
Russia has agreed with Saudi Arabia to extend by six to nine months a deal with OPEC on reducing oil output, Russian President Vladimir Putin said. Saudi Energy Minister Khalid al-Falih said on Sunday that the deal would most likely be extended by nine months and no deeper reductions were needed.
China’s factory activity shrank more than expected in June, an official manufacturing survey showed. The Purchasing Managers’ Index (PMI) stood at 49.4 in June, China’s National Bureau of Statistics said on Sunday.
U.S. energy firms added four oil rigs in the week to June 28, bringing the total count to 793, Baker Hughes said in its closely followed report on Friday.
Naphtha
Asia’s naphtha crack eased to a 1-1/2 week low of $19.60 a tonne on Friday after reaching a six-week high in the previous session as spot deals were mostly muted following earlier purchases.
South Korea’s Hanwha Total and SK Energy bought heavy full-range naphtha on Thursday and Monday respectively for delivery in the first half of August at premiums in the high single digit a tonne to Japan quotes on a cost-and-freight basis. Taiwan’s Formosa had also locked in cargoes but of open-specification grade on Thursday for August delivery at discounts as supply of the lighter grade is in abundance..
The July crack is higher at -$ 5.85 /bbl
Gasoline
No fresh news. Gasoline stocks in ARA rose by 74 KT to 1.24 million tonnes.
The July crack is higher at $ 7.20 / 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, as against a discount of 9 cents per barrel on Thursday.
Gasoil stocks in ARA fell by 49 KT to 2.76 million tonnes.
Cash differentials for jet fuel were at a premium of 5 cents a barrel to Singapore quotes on Friday, buoyed by firmer deal values in the physical market. The differentials were at a discount of 7 cents a barrel on Thursday.
The July crack for 500 ppm Gasoil has risen to $ 14.90 /bbl with the 10 ppm crack at $ 15.60 / bbl. The regrade is at +$ 0.50 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front month time spread for 380-cst fuel oil hit a record high on Friday, boosted by concerns of a narrowing near-term supply outlook.
The front-month July/August 380-cst time-spread widened its backwardated structure to $15.25 a tonne, up from $13.75 a tonne in the previous session. The previous record for the front-month time spread was at $15 a tonne recorded in May 2015.
Cash premiums for 380-cst fuel oil jumped to a near 8-month high of at $9.60 a tonne to Singapore quotes, up from $7.73 a tonne in the previous session and their highest since Nov. 5.
Fuel oil inventories in ARA rose by 159 KT to 1.23 million tonnes.
The July180 cst crack is stronger at + $ 1.10 / bbl with the visco spread narrowing further to $ 1.05 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The August fuel oil crack is valued at -$0.090 / bbl. As planned, we shall lay on a tranche of hedge there today. If cracks strengthen further, then our next target will be at premiums to crude.
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.