Crude Oil
U.S. oil futures rose 1.7% on Thursday, lifted by a deep draw on U.S. crude inventories, especially at the benchmark’s delivery hub due to increased demand with the start-up of two new West Texas pipelines. Brent crude futures settled 59 cents higher at $ 61.08 /bbl. WTI crude futures settled 93 cents higher at $56.71 /bbl.
The approach of Hurricane Dorian toward Florida also raised fears that offshore U.S. crude producers may slow output if the storm passes into the Gulf of Mexico over the weekend. Dorian is forecast to strengthen and become a highly dangerous Category 4 hurricane on Sunday, the National Hurricane Center said. Refineries in Louisiana, however, were not making preparations on Thursday for the storm, said people familiar with operations.
Cushing stocks have dropped by over 300,000 barrels since the government report, citing market intelligence firm Genscape’s midweek report. The drop came after two new pipelines opened in the Permian Basin this month, flowing crude to the U.S. Gulf Coast and tightening supplies at Cushing.
On Wednesday, EPIC proposed to lower transportation rates on its 400,000 bpd line to $1.35 a barrel from $2.50, effective Sept. 1, according to U.S. regulatory filings. Cheaper rates will encourage greater flows to the coast and reduce deliveries into Cushing.
China’s commerce ministry said on Thursday China and the United States were discussing the next round of face-to-face trade talks scheduled for September, but hopes for progress hinged on whether Washington could create favourable conditions.
Naphtha
Asia’s naphtha crack edged up to a three-session high of $14.30 a tonne on Thursday with demand for cargoes supporting the market this week.
Several buyers, including South Korea’s Hanwha Total, SK Energy, YNCC, Lotte Chemical and Japan’s Idemitsu, have locked in October cargoes.
Taiwan’s Formosa has an outstanding tender to buy open-specification naphtha for first-half October cargoes while CPC was looking to buy full-range naphtha for Oct. 6-31 arrival at Kaohsiung.
The September crack is lower at -7.10 / bbl.
Gasoline
Asia’s gasoline crack hit a two-week high of $7.04 a barrel on demand and tightening supplies due to refinery maintenance.
Indonesia’s Pertamina’s September import demand is expected to reach 11 million barrels versus a monthly average of 10 million barrels due to coming maintenance at a gasoline-making unit at its Cilacap refinery next month. It has been buying spot cargoes for September delivery these two weeks at prices ranging from a discount of 50 cents to a small premium a barrel to Singapore quotes on a FOB basis. Pertamina is also looking to buy gasoline through a quarterly contract for 88-octane grade scheduled for October to December delivery.
Taiwan’s CPC will shut a crude distillation unit and a residue fluid catalytic cracker (RFCC) for planned maintenance from September to October. South Korea’s S-Oil will also be shutting a gasoline-making unit next month.
Singapore’s light distillate stocks rose 710 KB in the week to Wednesday to reach a seven-week high of 11.272 million barrels, data from Enterprise Singapore showed on Thursday.
The September crack is lower at $ 7.05 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10ppm sulphur content inched lower by a cent to 21 cents a barrel to Singapore quotes.
Cash differentials for jet fuel were at a premium of 19 cents a barrel to Singapore quotes on Thursday, compared with a 10-cent premium in the previous session.
The September/October time spread for jet fuel traded at a premium of 22 cents a barrel on Thursday, up from 21 cents a day earlier.
Jet Demand continues to be strong due to a persistent support from the region’s aviation market, which has benefited in recent years by passenger demand growth, lower airfare and increased route options for travellers.
Chinese private refiner Hengli Petrochemical Co this month sold its first jet fuel cargo for export through a state-owned firm, bypassing Beijing’s export quota restrictions. Hengli sold the 40,000-tonne jet fuel cargo to state-owned China National Aviation Fuel Corp (CNAF), which exported the shipment, in a transaction model that would allow the private refiner to step up oil product exports to international markets. Hengli, which ramped up its 400 kbpd refinery in Dalian to full rates in late May, has not been able to obtain an aviation fuel export quota from Beijing, despite having submitted its application months ago.
Singapore middle distillate stocks rose 12.1% to 11.3 million barrels in the week ended Aug. 28, Enterprise Singapore data showed. Weekly middle distillate inventories have averaged 11.1 million barrels so far this year, having averaged 9.6 million barrels a week in 2018, Reuters calculations showed. Overall, onshore middle distillate inventories were 8.6% higher year-on-year.
The September crack for 500 ppm Gasoil is lower $ 15.70 /bbl with the 10 ppm crack at $ 16.55 / bbl. The regrade is at + $ 0.35 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premium for Asia’s 380-cst high-sulphur fuel oil edged higher to a third record high this week at $40 per tonne to Singapore quotes on Thursday, up from the previous record of $39.30 per tonne in the previous session.
Firm buying interest and tight HSFO supplies have propelled the fuel oil market to fresh record highs this week as the global marine fuels industry prepares for the 0.5% sulphur cap in 2020.
Backwardation, however, fell on Thursday with the 380-cst HSFO Sept-Oct time spread trading at about $33.50 per tonne. The front-month 380-cst time spread was at a record $39.25 a tonne in the previous session, Refinitiv data showed.
Residual fuel oil inventories in Singapore climbed to a three-week high in the week ended Aug. 28. Stocks rose by 1.067 million barrels to 21.439 million barrels, data from Enterprise Singapore showed on Thursday. Compared with year-ago levels, this week’s onshore fuel oil inventories were 29% higher.
Despite the higher weekly inventories, the availability of HSFO in the Singapore bunkering hub remains thin. A growing share of Singapore fuel oil stocks is being comprised of low-sulphur fuels.
The September 180 cst crack is higher at – 5.15 / bbl with the visco spread at $ 1.15 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh recommendations for today.
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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.