Crude Oil
Oil prices fell for a fourth day on Wednesday, extending losses after a surge in U.S. inventories surprised investors. However, Brent prices staged a smart recovery to end the day marginally positive. Brent crude futures fell 98 cents to settle at $60.61 a barrel. WTI crude futures fell 48 cents to settle at $55.06 a barrel..
The huge build overshadowed an interest rate cut by the Federal Reserve for a third time this year. The FRB also signaled that it plans no further cuts unless the economy takes a turn for the worse.
Chile withdrew on Wednesday as the host of an APEC summit next month at which the US and China had been expected to sign a deal to ease a trade war that has hurt the global economy, as raging street protests gripped the South American country.
doe data
In consonance with the overall build in crude stocks, inventories at the Cushing, Oklahoma, delivery hub rose for a fourth straight week, gaining 1.6 million barrels last week, the EIA said.
The build in crude stocks seems to be attributable to the huge increase in net imports. The draw in gasoline and distillate inventories appears to have caused by a strong increase in demand. Gasoline stocks fell for he fifth week in a row bringing stocks down to their lowest levels since Nov. 2017.
Our material balance suggests that the draws in product stocks may have been overstated, while the build in crude stocks has been understated. Nevertheless, absolute figures of gasoline demand at 9.78 mb/d as well as distillate demand at 4.26 mb/d. are impressive.
Naphtha
Asia’s naphtha crack rose to a three-session high of $81.68 a tonne on Wednesday, supported by solid demand.
Taiwan’s Formosa is looking to buy open-specification naphtha for Dec. 1-10 arrival at Mailiao in a tender but results were not immediately clear.
The November crack is higher at – $ 2.50 / bbl.
Gasoline
No fresh news on gasoline markets. Gasoline stocks in Fujairah fell by 737 Kb to 6.03 million barrels.
The November crack is marginally lower at $ 6.95 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for 10 ppm gasoil fell for a second straight session on Wednesday, hurt by weaker buying interest for physical cargoes, while the front-month time spread marginally widened its backwardated structure.
Cash premiums for 10ppm gasoil slipped to 98 cents a barrel to Singapore quotes on Wednesday, compared with $1.03 a barrel on Tuesday. The November/December time spread traded at a premium of 87 cents per barrel on Wednesday, 2 cents higher than Tuesday.
Cash premiums for jet fuel were at premium of 11 cents a barrel to Singapore quotes on Wednesday, as against a premium of 15 cents a barrel in the previous session.
The physical jet fuel market in the Singapore trading window remained muted with no bids or trades on Wednesday.
The November crack for 500 ppm Gasoil is lower at $ 15.35 /bbl with the 10 ppm crack at $ 16.35 / bbl. The regrade is at $ 0.40 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month time spread between 0.5% low-sulphur and 3.5% high-sulphur fuel oils firmed on Wednesday amid signs of a steady rise in demand for the low-sulphur fuels.
The November VLSFO-HSFO price differential was at $230.50 a tonne, up $3 a tonne from the previous session. The November price spread was at a peak of $250 per tonne on Oct. 9.
Residual fuel oil inventories in Fujairah hit a record high of 14,551 million barrels in the week to Oct. 28.
Growing stockpiles of VLSFO, mostly shipped in from Europe, in the Fujairah bunkering and trading hub ahead of the 2020 deadline contributed to the record fuel oil inventories there.
The November 180 cst crack is higher at -$ 14.90 / bbl with the visco spread at $ 1.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh recommendations 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.