Crude Oil
Oil prices gained roughly 2% on Monday after a weekend attack on a Saudi oil facility by Yemen’s Houthi forces threatened crude supplies. Brent crude futures settled $1.10 higher at $ 59.74 /bbl. WTI crude futures settled 1.34 higher at $56.21/bbl.
A drone attack by the Houthi group on an oilfield in eastern Saudi Arabia on Saturday caused a fire at a gas plant, adding to Middle East tensions, but state-run Saudi Aramco said oil production was not affected.
Iran-related tensions appeared to ease after Gibraltar released an Iranian tanker it seized in July, with the vessel sailing for Greece, though Tehran warned the United States against any new attempt to seize the tanker in open seas. The US, in turn, has warned that efforts to assist the Iranian tanker freed from detention in Gibraltar could be considered as providing material support to a US-designated foreign terrorist organization, which has immigration and potential criminal consequences.
A rally in equities from growing expectations that global economies would take actions to counteract slowing growth also helped oil, which often follows stock prices.
China’s announcement of key interest rate reforms over the weekend has fuelled expectations of an imminent reduction in corporate borrowing costs in the struggling economy, boosting share prices on Monday.
Crude pipelines opening up in the United States, easing bottlenecks that weighed on the U.S. benchmark, supported WTI in particular. In the long run, however, more U.S. crude is likely to suppress prices if the oil heads for storage.
Trump said on Monday the US Federal Reserve should consider cutting interest rates by 1 percentage point and advocated “some quantitative easing” as he continued his pressure campaign on the central bank.
Naphtha
Asia’s naphtha crack rose to $20.85 a tonne on Monday but this was down by nearly 79% from a year ago due to heavy supplies this year.
Cracker maintenance and outages coupled with volatile crude prices and availability of alternative feedstock liquefied petroleum gas (LPG) have impacted naphtha fundamentals.
The September crack is lower at -6.35 / bbl.
Gasoline
No fresh news on the Gasoline market.
The September crack is lower at $ 5.65 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10ppm sulphur content were at 40 cents a barrel to Singapore quotes on Monday, 1 cent higher from Friday.
China’s diesel production in July was at 13.56 million tonnes, 4.3% higher from June. This comes after the country issued its third batch of oil products export quotas for 2019 last month, prompting traders to expect more barrels coming out of China. Indian diesel consumption usually drops during monsoon as heavy rainfall and floods curb demand for the transportation fuel, typically leading to a rise in exports.
India’s domestic diesel sales in July were at 6.83 million tonnes, about 8% lower than June consumption levels. Monthly government data on exports is due later this week.
The cracks for the benchmark gasoil grade, however, are still holding at their highest August levels in the last six years. The strength in margins is partly supported by recent weakness in crude oil prices, with Dubai spot prices shedding about 10% since July-end.
Cash differentials for jet fuel were at a narrow premium of 2 cents a barrel to Singapore quotes, compared with a 2-cent discount on Friday.
The September crack for 500 ppm Gasoil has dropped to $ 15.75 /bbl with the 10 ppm crack at $ 16.55 / bbl. The regrade is at + $ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Active trade volumes in Asia’s 380-cst front-month high-sulphur fuel oil HSFO time spread saw its backwardated structure jump to a near two-week high on Monday. The 380-cst Sept-Oct time spread had settled on Friday at a premium of $13.75 per tonne.
The September 180 cst crack is higher at – 7.45 / bbl with the visco spread at $ 2.15 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh recommendations 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.
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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.