Crude Oil
Oil prices fell on Tuesday, closing out the largest monthly decline in two years on supply worries after OPEC output reached a 2018 high in July, overshadowing reports that the United States and China might reopen trade talks that could boost demand. October Brent crude futures fell $1.34 to settle at $74.21 a barrel. The September contract, which expires later on Tuesday, settled at $74.25. U.S. crude futures fell $1.37, or nearly 2 percent, to settle at $68.76.
Brent lost more than 6 percent in July, while U.S. crude futures slumped about 7 percent, the biggest monthly decline for both benchmarks since July 2016.
Signs that a supply disruption in the Bab al-Mandeb Strait in the Red Sea could be resolved weighed on prices throughout the trading session. Yemen’s Houthi group said it was ready to unilaterally halt attacks in the Red Sea to support peace efforts. Saudi Arabia suspended oil shipments through the strait last week after the Houthis attacked two Saudi oil tankers.
API DATA
The size of the build i.e. 5.6 million barrels was even greater given that the market was expecting a draw. With both gasoline and distillates building as well, crude prices took a further tumble this morning with Brent quoting at $ 73.85/bbl at the time of writing.
Naphtha
Asia’s naphtha physical crack continued to ease from last week’s high settling at $ 120.35 / MT on Tuesday.
Demand for cargoes delivering in first-half September has been strong but buyers have not yet started purchases for second-half September.
The August crack has improved to $ 0.80 /bbl.
Gasoline
No market news on gasoline today.
The August crack has risen to $ 9.40 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10 ppm sulphur content stayed at a premium of 1 cent a barrel to Singapore quotes. The underlying gasoil inventories in the region is on the lower side as compared to the past couple of years, but expectations for more shipments coming out of China and India are still driving market sentiment to an extent.
China’s diesel exports in June were up 23 percent from a year earlier to 1.61 million tonnes, while India’s domestic demand for the transportation fuel usually remains weaker during the monsoon season, which leads to higher exports. India’s export data for June is due this week.
Meanwhile, jet cash premiums rose by a cent to 12 cents a barrel to Singapore quotes on Tuesday, bolstered by steady aviation demand. Jet cash differentials may stay comparatively a little stronger in the coming weeks as supplies are not that ample, but, there are not many drivers to push the market to very high levels anytime soon.
The August crack has fallen to $ 13.80 / bbl with the 10 ppm crack at $ 14.70 /bbl. The regrade is lower at $ 0.95 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Despite sluggish spot demand, Singapore 380-cst ex-wharf premiums edged higher on Tuesday on shortages of finished grade bunker fuels for prompt delivery. T
Inquiries for marine fuel supplies in the United Arab Emirates’ (UAE) Fujairah oil hub have spiked as shippers try to avoid loading tainted fuel oil that has clogged and damaged ship engines in Singapore recently.
The August 180 cst crack is stronger at -$ 0.35 / bbl with the visco spread at $ 1.05 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
A significant number of trades go out of our active watchlist as a new month begins and we shall have to track their settle. The fuel oil hedges are likely to lose money. But it is important to remember that they are acceptable losses as they were taken as hedges and are likely to be compensated by better prices of physical products.
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.