Crude Oil
Oil prices fell on Monday on fading concerns of supply shortfalls and conflicts in the Middle East. The front Brent future (which expires today) dropped $1.13 cents to settle at $60.78 a barrel. The December future, which becomes front month today, settled at $ 59.25 /bbl. WTI crude fell $ 1.84 to settle at $54.07/bbl.
For the month, Brent gained 0.6% while WTI fell 1.9% in an extremely volatile September thanks to the attack on the Saudi facility. For the quarter, however, Brent fell 8.7%, the worst quarterly drop since the fourth quarter of 2018, when prices dropped 35%. WTI also dropped 7.5% in the third quarter,.
The trade war between the United States and China has plunged global economic growth to its lowest levels in a decade weighed on oil demand growth. China’s official Purchasing Managers’ Index (PMI) was slightly improved this month, increasing from 49.5 in August to 49.8 in September, but remained below the 50-point mark that separates expansion from contraction on a monthly basis, data from the National Bureau of Statistics showed.
China, the world’s largest crude importer, warned of instability in international markets from any “decoupling” of China and the United States, after sources said U.S. President Donald Trump’s administration was considering delisting Chinese companies from U.S. stock exchanges.
Saudi Aramco last week restored full capacity to the level before the attacks on its oil facilities, Ibrahim Al-Buainain, chief executive officer of its trading arm, said on Monday at a conference in the United Arab Emirates. Aramco’s oil output capacity was restored to 11.3 million barrels per day (bpd) after the attack knocked out 5.7 million bpd of the kingdom’s output. Saudi officials said Aramco will reach 12 million bpd of capacity by November.
U.S. oil production fell 276,000 bpd in July to 11.81 million bpd, a third monthly decline since its record at 12.1 million bpd in April.
Naphtha
Asia’s naphtha intermonth timespread rose for the fourth straight session on Monday to touch a 16-month high as uncertainty over supply lingered following attacks on Saudi Arabia’s oil facilities on Sept. 14. Naphtha price for front-month first-half November was $15.50 higher than the following month, making this the widest intermonth gap since May 28, 2018.
Spot demand was mostly muted following a string of purchases last week, which saw spot premiums hit levels not seen since first-half of 2018. A lack of clarity on supplies coming out of the Middle East was driving spot prices higher. It was also unclear how many cargoes would be arriving in Asia in November from Europe as it was too early to determine the final volumes.
The October crack is higher at – $ 4.45 / bbl.
Gasoline
No fresh news on the gasoline markets.
The October crack is higher at $ 8.10 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10ppm gasoil rose to 38 cents a barrel to Singapore quotes, their strongest since Aug. 20. They were at a premium of 35 cents a barrel on Friday.
The front-month time spread for the transportation fuel traded at a premium of $1.47 a barrel, its widest backwardation since Singapore’s benchmark grade was shifted to gasoil with 10ppm sulphur content in January 2018.
Cash premiums for jet fuel were at a premium of 30 cents a barrel to Singapore quotes, compared with Friday’s 20-cent premium per barrel.
The October crack for 500 ppm Gasoil is higher at $ 18.20 /bbl with the 10 ppm crack at $ 18.90 / bbl. The regrade is at + $ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high-sulphur fuel oil (HSFO) softened on Monday as industry participants anticipated a gradual shift to cleaner marine fuels in preparation for the 2020 deadline to switch to 0.5% sulphur content marine fuels.
380-centistoke (cst) cash premiums, prompt time spreads and refining margins all traded lower on Monday, widening their gap from recent highs earlier in the month. Despite the anticipated decline in HSFO fuel as the year draws to an end, tight supplies and some levels of demand will continue to offer some support.
The October 180 cst crack has improved to -$ 6.75 / bbl with the visco spread at $ 1.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action for today. Should November and December 10 ppm gasoil cracks rise above $ 19/bbl, we will consider hedging them.
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.