Crude Oil
Oil prices plummeted more than 7% on Thursday after President Donald Trump said he would impose additional tariffs Chinese imports starting Sept. 1. Brent crude fell $ 4.55 to settle at $60.50 a barrel. WTI crude futures fell $ 4.68 to settle at $53.95 a barrel.
The drop in Brent crude was the steepest in more than three years, while WTI had not lost more in percentage terms for over four years. Brent hit a low of $ 60.02 /bbl during the session while WTI touched $ 53.59. This fall came over heavy volume as more than 836,000 contracts changed hands, surpassing the daily average of about 623,000 contracts.
This fall seems to be undoing a fragile oil rally built on steady drawdowns in U.S. inventories even as global demand looked shaky due to the U.S.-China trade dispute. Trump’s announcement of an additional 10% levy on $300 billion worth of Chinese goods undermined hopes that the world’s two largest economies would reconcile their differences.
The U.S.-China trade war has damaged the energy demand outlook and the trade war is expected far from over. Wall Street abruptly reversed its gains following Trump’s tweets, after spending most of the session on track for the best day since June. Bond prices also rose, causing yields to drop as investors sought out safe assets.
U.S. manufacturing activity slowed to a near three-year low in July, and construction spending fell in June as investment in private construction projects tumbled to its lowest level in 1-1/2 years.
Naphtha
Asia’s naphtha crack rose to a 2-1/2 week high of $32.95 a tonne on Thursday, while gasoline’s profit margin climbed to more than a week high of $5.76 a barrel, supported by demand.
There have been a string of naphtha deals recently for naphtha scheduled for September delivery to South Korea and Japan.
The August crack is higher at -$ 5.75 /bbl
Gasoline
No fresh news on the gasoline markets. Singapore’s onshore light stocks rose for the first time since June 19 to a two-week high of nearly 10 million barrels in the week to Wednesday. But current levels were about 35% lower than a year ago.
Strong demand in the United States was also drawing on European gasoline. Some 1.67 million tonnes of European gasoline and gasoline components had arrived in the United States last month, the highest volume since May when 2.1 million tonnes were moved.
The August crack is lower at $ 6.65 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil were at 22 cents a barrel to Singapore quotes on Thursday, compared with 21 cents per barrel a day earlier.
Cash differentials for jet fuel were at a premium of 32 cents a barrel to Singapore quotes on Thursday, compared with a 35-cent premium in the previous session.
Middle distillate inventories in Singapore dropped 140 KB to 10.4 million barrels, their lowest levels in 6 weeks.
The August crack for 500 ppm Gasoil is lower at $ 15.85 /bbl with the 10 ppm crack at $ 16.75 / bbl. The regrade is at +$ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high-sulphur fuel oil (HSFO) extended gains on Thursday with firm buying interest lifting 380-cst HSFO cash premiums and times spread higher.
The premiums on 380-cst jumped to a near two-week high of $22.34 a tonne to Singapore quotes, up from $19.81 a tonne in the previous session.
Similarly, the Aug/Sept 380-cst time-spread climbed to $39 a tonne, up from $38.25 a tonne on Wednesday.
This came as Singapore fuel oil inventories snapped six straight weeks of declines in the week to July 31, hitting a three-week high despite thin net imports of the fuel. Onshore fuel oil stocks rose by 2.166 million barrels to 19.082 million barrels
Compared with year-ago levels this week’s onshore fuel oil inventories were 29% higher.
The August 180 cst crack has plummeted to + $ 2.00 / bbl with the visco spread at $ 1.25 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The hedge we laid yesterday paid off handsomely, it would seem. 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.
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.