Crude Oil
Oil prices edged higher on Thursday supported by rising tensions between the West and Iran. Brent crude futures rose 21 cents to settle at $63.39 a barrel. WTI crude futures rose 14 cents to settle at $56.02 a barrel.
The big decline in U.S. crude stockpiles saw the Asian markets take Brent to a session high of $ 64.23 a barrel, but gains were capped due to lingering worries about slowing economic growth that could reduce fuel demand.
U.S. stocks fell on Thursday after a handful of mixed earnings reports pointed to a slowing global economy, and as the European Central Bank chief’s comments on monetary policy failed to impress investors. However, hopes that the Federal Reserve would adopt a looser monetary policy at its rate-setting meeting next week to counter the impact of the U.S.-China trade war have helped Wall Street’s main indexes scale record levels this month.
Lead negotiators for China and the United States will meet in Shanghai on Tuesday for two days in the next round of trade talks, China’s commerce ministry confirmed. A series of purchasing manager index (PMI) readings in the United States and Europe were weaker than expected. The German PMI, tracking the manufacturing and services sectors, hit a seven-year low in July, suggesting a deteriorating growth outlook for Europe’s largest economy. The fall was driven by the auto sector.
Saudi Arabia aims to raise the capacity of its east-west pipeline by 40% in two years so more of its oil exports can avoid passing through the Strait of Hormuz, the energy minister said on Thursday.
A proposal to modify US oil sanctions on Venezuela to allow crude exports to be bartered for food has divided the country’s opposition between those who say the move would stave off famine and those who predict President Nicolas Maduro would abuse it.
Naphtha
No fresh news on Naphtha markets today.
The August crack is lower at -$ 6.20 /bbl
Gasoline
Asia’s gasoline crack recovered from a near one-month low on Thursday to reach a two-session high of $5.02 a barrel, supported by a drawdown in stocks. Singapore’s onshore light distillates stocks fell 948 KB (9.3%) to a near five-year low of 9.2 million barrels in the week to July 24.
The August crack is higher at $ 6.20 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil were at 19 cents a barrel to Singapore quotes on Thursday, compared with a premium of 30 cents per barrel a day earlier.
Cracks for the benchmark gasoil grade are currently at their highest seasonal levels in the last six years, partly helped by some refinery run cuts in the region. But, traders are concerned the market would likely weaken over the next few weeks as more export barrels come out of India and China.
On Wednesday, China issued its third batch of export quotas for refined oil products for 2019, totalling 6 million tonnes, taking the total export quotas to 48.15 million tonnes in 2019. With new refining capacities coming online and lacklustre domestic demand in China, the country is expected to export more diesel. Meanwhile, diesel demand typically takes a hit during monsoon months in India as heavy rainfall and floods curtail demand for the transportation fuel, leading to higher exports.
Cash premiums for jet fuel rose to 26 cents a barrel to Singapore quotes on Thursday, up from 21 cents per barrel on Wednesday.
Middle distillate stocks in Singapore dropped by 118 kb to 10.55 million barrels .
The August crack for 500 ppm Gasoil is lower at $ 16.05 /bbl with the 10 ppm crack at $ 16.75 / bbl. The regrade is at +$ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for Asia’s 380-cst high-sulphur fuel oil (HSFO) fell to a more than two-week low as weaker deal values and increased deal activity in the Singapore trading window weighed on spot premiums of the fuel.
The 380-cst HSFO cash premium fell to $16.52 a tonne to Singapore quotes on Thursday, down from $20.93 a tonne in the previous session and its lowest since July 9.
The August viscosity spread rose to a near-two month high of $12 per tonne, up from $10.25 a tonne in the previous session.
Singapore fuel oil inventories dropped for a sixth straight week to a more than eight-month low of 16.92 million barrels in the week ended July 24.
The August 180 cst crack has once again jumped to + $ 2.35 / bbl with the visco spread at $ 1.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The jump in the fuel oil crack once again prompts us to hedge the August crack at this level of +$ 2.35 /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.