Crude Oil
Oil rose on Wednesday, gaining support due to signs that OPEC and allied producers will continue to curb supplies in December. Brent crude lost gained 68 cents to settle at $59.42 a barrel. WTI crude rose 55 cents to $53.07 / bbl.
Oil prices pared gains in post-settlement trade after industry data showed a larger-than-expected increase in U.S. oil stocks.
US and Chinese trade negotiators are working on nailing down a Phase 1 trade deal text for their presidents to sign next month, the US Treasury Secretary said on Wednesday, adding he was prepared to travel to Beijing for more meetings if necessary.
US retail sales fell for the first time in seven months in Sep’19 by 0.3% suggesting that manufacturing-led weakness could be spreading to the broader economy, keeping the door open for the Federal Reserve to cut interest rates again later this month.
US crude exports from the Corpus Christi area are expected to slow in the second half of Nov’19 from record levels in the week ended 27 Sep’19, where it hit 1.6 MB/D, due to high freight rates and reduced crude flows into the region via a key pipeline, market sources said on Wednesday.
OPEC and its allies meet on Dec. 5-6 in Vienna to review output policy. OPEC Secretary-General Mohammad Barkindo has said deeper output cuts are an option. On Tuesday, he said OPEC would do what it could with allied producers to sustain oil market stability beyond 2020.
api data
U.S. crude inventories in the week to Oct. 11 rose to 432.5 million barrels, according to the API weekly report ahead of government stocks data due on Thursday. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.6 million barrels, API said.
The draw in distillate stocks continues to be strong and that could support the complex. Official data will be released today.
Naphtha
Asia’s naphtha intermonth timespread eased $1 to $26 a tonne on Wednesday but the current value remains more than 7 times higher than the average for the first nine months of this year due to an persistent supply crunch.
South Korea LG Chem came forward on Wednesday to buy naphtha for first-half December delivery at premiums of about $21 a tonne to Japan quotes on a C&F basis but pegged to a 45-day formula instead of the usual 30 days. Since last week, premiums of cargoes sold into Japan and South Korea for November arrival had already hit $30 a tonne versus discount levels fetched for cargoes sold during June to first-half September.
The November crack is lower at – $ 1.60 / bbl.
Gasoline
Asia’s gasoline crack remained above $9 a barrel, a level which is more than double the average for January to September. Gasoline stocks in Fujairah jumped by over 1.4 million barrels to 7.1 million barrels
The November crack is higher at $ 8.40 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10ppm gasoil rose further to $1.66 a barrel to Singapore quotes, their highest since Oct. 26, 2018. They were at a premium of $1.35 a barrel on Tuesday.
Cash differentials for jet fuel were at a discount of 1 cent a barrel to Singapore quotes on Wednesday, their weakest levels since mid-August. They were at a premium of 12 cents a barrel to Singapore quotes on Tuesday.
The physical market for jet fuel in Singapore remained quiet with no deals or bids on Wednesday. The jet fuel market is partly getting pressured by the ongoing trade tensions between U.S. and China as the air freight market is taking a hit. The overall jet market, however, still gets a steady support from the regional aviation market, which has grown in recent years with new and expanded airports, and increased city-pair options for travellers. Asia-Pacific airlines’ passenger traffic in August rose 3.5% compared to the year-ago period, and was also higher than a 2.6% rise in July, the International Air Transport Association (IATA) said in a statement last Thursday.
Distillate stocks in Fujairah rose by 600 KB to 2.83 million barrels.
The November crack for 500 ppm Gasoil has jumped to $ 17.20 /bbl with the 10 ppm crack at $ 18.20 / bbl. The regrade is at + $ 0.55 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high-sulphur fuel oil (HSFO) was largely steady on Wednesday as the market inched closer to January 2020, when new rules will see demand for sulphur-rich marine fuels plummeting due to stricter environmental guidelines.
The front-month 380-cst barge crack narrowed its discount to Brent crude on Wednesday to minus $26.69 a barrel,
Fuel Oil stocks in Fujairah rose by 191 kb to 12.77 million barrels
The November 180 cst crack is higher at -$ 14.85 / bbl with the visco spread at $ 2.80 /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.