U.S. oil fell nearly 2 percent on Thursday, despite a larger-than-expected decline in U.S. crude inventories, while global benchmark Brent was little changed, pushing the spread between the two to its widest in more than three years. Brent crude futures gained 9 cents to settle at $77.59 /bbl. U.S. West Texas Intermediate (WTI) crude futures fell by $ 1.17 to settle at $67.04 /bbl.
Brent crude losses were more limited, as the prospect that OPEC will bring its supply-cut deal to a close by the end of the year has had a greater effect on the U.S. benchmark due to ongoing worries about U.S. infrastructure constraints. At one point, the premium for Brent over WTI surpassed $11 a barrel, the largest spread since March 2015. That spread has doubled in less than a month, as a lack of pipeline capacity in the United States has trapped a lot of output inland..
The DOE reported a draw of 3.6 million barrels this week. This was more than the draw expected by the markets. Gasoline surprisingly built by half a million barrels as did distillate stocks. The build in distillate stocks is a small relief although they currently are at their lowest level for this time of the year as they are in Singapore as well, Click Here for a graphical depiction of Global Gasoil stocks by region.
Crude stocks were hit by a triple whammy of a reduction in imports, an increase in exports and an increase in refinery runs increased to 93.9%. In fact, the material balance statement would suggest a far larger draw in stocks than reported. We had mentioned our DOE report of May 24 that the build reported was less than the material balance. This appears to have compensated out this week.
The gasoline appears to be due to an inexplicable lack of change in demand. It is very rare that the same figure would be reported two weeks in a row. Distillates reported a build notwithstanding a healthy increase in demand of 682 kb/d.
Click Here for more analytics of the DOE data.
Asia’s naphtha crack fell 6.22 percent to $100.25 a tonne, the lowest since May 7, dragged down by weak gasoline fundamentals but spot premiums remained firm. Indian cargoes continued to fetch premiums of $ 25 / MT over MOPAG.
The June crack has dropped to -$ 1.40 / bbl
Asia’s gasoline crack fell for a sixth straight session on Thursday to $8.10 a barrel, the lowest value since May 15 as high supplies and oil prices weighed. Singapore’s onshore light distillates stocks, which comprise mostly gasoline and blending components for petrol, hit a nine-week high of 14.532 million barrels in the week to May 30, official data showed. This was 7.05 percent below the record high of 15.635 million barrels in the week ended March 27. Stocks in ARA rose as well by 9 KT to 1007 KT.
The June crack has dropped to $ 10.10 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash premiums for jet fuel dropped on Thursday to their lowest in more than two weeks, on concerns about increasing supplies in the region as refineries undergoing seasonal turnarounds return from maintenance and begin to ramp up production. Cash differentials for jet fuel dipped to 7 cents a barrel to Singapore quotes, down from 19 cents a barrel on Wednesday. The June-July spread also narrowed its backwardated structure.
Meanwhile, cash differentials for gasoil with 10 ppm sulphur content slipped to 35 cents a barrel to Singapore quotes on Thursday, compared with 45 cents on Wednesday.
Singapore’s onshore middle distillates stocks declined about 13 percent in the week to May 30 to 7.2 million barrels, the lowest in more than four years. Overall, onshore middle-distillate inventories were about 46 percent lower than a year ago. Stocks in ARA rose slightly though, by 44 KT, to 2.08 million tons.
The June crack is lower at $ 14.75 / bbl with the 10 ppm crack at $ 15.60 /bbl. The regrade has improved to $ 0.35 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
The front-month 380-cst fuel oil crack discount to Brent crude was only slightly wider on Thursday, despite sharp gains in overnight crude oil prices, reflecting the bullish market fundamentals of the residual fuel. In another illustration of bullish market sentiment, 380-cst cash premiums climbed to their highest since March 2016 amid limited availability of finished-grade spot cargoes of the fuel. The June 380-cst fuel oil crack to Brent crude was trading at a discount of about $10.60 a barrel on Thursday, slightly down from the $10.50 a barrel discount in the previous session.
Meanwhile, Singapore’s fuel oil stocks jumped to a two-month high in the week to May 30, official data showed on Thursday. Singapore weekly onshore fuel oil inventories jumped 2.711 million barrels to a total of 21.052 million barrels in the week ended May 30. Stocks in ARA however declined by 196 KT to 1.1 million tons.
The June 180 cst crack is higher at -$ 3.55 / bbl. The visco spread has widened to $ 1.75/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The calendar 19 prices for middle distillates are slowly easing out. The whole action seems to be playing out in the second half of 2019. The value for Cal 19 Gasoil 500 ppm is $ 18.55 /bbl while the value for the first half is a far lower $ 16.75 / bbl
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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.