Crude Oil
Oil prices fell more than 3% after U.S. President Donald Trump said progress has been made with Iran, signaling tensions could ease in the Mideast. Brent crude futures fell $2.13 a barrel to settle at $64.35. WTI futures settled at $57.62 a barrel, down $1.96.
U.S. oil companies on Monday began restoring some of the nearly 74% of production that was shut at platforms in the Gulf of Mexico because of Hurricane Barry. Workers were returning to the more than 280 production platforms that had been evacuated. It can take several days for full production to resume. 171 production platforms, or 26%, have not resumed operating, down from 267 platforms on Monday.
Trump on Tuesday said a lot of progress had been made with Iran and that he was not looking for regime change in the country. Trump, who made the remarks at a Cabinet meeting in the White House, did not give details about the progress, but U.S. Secretary of State Mike Pompeo said at the meeting Iran had said it was prepared to negotiate about its missile program.
Uncertainty about China’s economic prospects also pressured prices lower after data on Monday showed growth in the country had slowed to 6.2% from a year earlier, the weakest pace in at least 27 years. However, both sides still continue to maintain belligerent stances. President Trump said on Tuesday the US still has a long way to go to conclude a trade deal with China but could impose tariffs on an additional $325 billion worth of Chinese goods if it needed to do so.
The US did not fully comply with a WTO ruling and could face Chinese sanctions if it does not remove certain tariffs that break WTO rules, the WTO’s appeals judges said in a ruling on Tuesday.
api data
While crude stocks have drawn, the draw is certainly a lot less than expected given the shut downs for the second half of the week. While the same can be said about gasoline, the draw in distillate stocks is HUGE.
Naphtha
Asia’s naphtha crack fell to a 2-1/2-week low of $24.90 a tonne on Tuesday, hit by a second straight day of muted demand.
Japan imported 906,282 tonnes of naphtha for June arrival. This was down 26.7% from a month earlier and also the lowest monthly import volume since April 2018. Japan’s ethylene output in June, at nearly 493,000 tonnes, was down 1.69% and the lowest monthly production since February.
The August crack is higher at -$ 5.65 /bbl
Gasoline
Asia’s gasoline margins were near a one-week low of $7.22 a barrel, tracking weaker Brent crude.
Gasoline margins still reflected a firm market, however, as they were 22.8% lower than this year’s peak at $9.35 but substantially higher than the lowest seen for this year at a discount of $2.85.
Production cuts caused by previous unworkable margin levels and maintenance had supported the gasoline market.
India’s Bharat Petroleum Corp Ltd bought gasoline in a rare move for July arrival at Kandla to meet demand and plug a supply gap due to heavy refinery maintenance as refiners upgrade to produce clean fuels from 2020 as mandated by the government. The 20 KT cargo was bought at premiums of about $9 a barrel to Singapore quotes on a cost-and-freight basis.
Stronger gasoline fundamentals were also reflected in Chinese CNOOC’s sale of a gasoline cargo scheduled for Aug. 11-12 loading from Huizhou at a roughly $2 a barrel premium to Singapore quotes on an FOB basis, double the premium it received for a cargo sold for July 10-11 loading from the same port recently..
The August crack is higher at $ 8.10 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil were at 1 cent per barrel to Singapore quotes on Tuesday, compared with a discount of 7 cents per barrel on Monday.
Cash differentials for jet fuel slipped on Tuesday to a premium of 18 cents a barrel to Singapore quotes, down from 26 cents a barrel on Monday.
The August crack for 500 ppm Gasoil is steady at $ 15.15 /bbl with the 10 ppm crack at $ 15.85 / bbl. The regrade is at +$ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums of Asia’s 380-cst high-sulphur fuel oil (HSFO) extended losses amid weaker deal values for cargoes of the fuel in the Singapore trading window on Monday.
Cash premiums for 380-cst HSFO fell to $17.80 per tonne to Singapore quotes, down from $19.78 a tonne in the previous session and a record $24.31 on Thursday.
Singapore marine fuel sales slipped to a two-month low of 3.92 million tonnes in June, down 2.2% from the previous month and 0.1% lower than the same time last year, data from the Maritime and Port Authority of Singapore (MPA) showed. Reduced shipping traffic to Singapore stemming largely from ongoing U.S.-China trade tensions has continued to weigh on demand for marine fuels, or bunkers, in June.
The August 180 cst crack has jumped back to + $ 0.75 / bbl with the visco spread at $ 0.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Cracks have strengthened across the board today as crude prices tumbled. However, there appears to be nothing of particular interest to hedge 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.