Oil prices pared most of the gains of the Asian morning as worries over supply persisted. Brent futures rose 32 cents to close at $ 65.06 / bbl. WTI crude futures rose 62 cents to settle at $59.09 a barrel.
During the session, Brent touched an intraday high of $66.75 and WTI touched its highest in over five weeks at $60.28.
The closed OPEC meeting lasted for more than six hours. Iran – under U.S. sanctions alongside OPEC ally Venezuela – on Monday joined top producers Saudi Arabia, Iraq and Russia in supporting an extension of a supply cut. Russian President Vladimir Putin said on Sunday he had agreed with Saudi Arabia to extend existing output cuts of 1.2 million barrels per day (bpd) by six to nine months. Saudi Energy Minister Khalid al-Falih said the deal would most likely be extended by nine months and no deeper reductions were needed.
President Donald Trump said on Monday that trade talks with China were under way and any deal would need to be somewhat tilted in favor of the United States. He said he expected China’s negotiating position to move closer to Washington’s. Talks broke down in May after the United States accused China of backtracking on reform pledges. Trump said China has had a “big advantage” over the United States in trade for “many years.” “So obviously you can’t make a 50-50 deal. It has to be a deal that is somewhat tilted to our advantage,” Trump said.
Iran will enrich uranium above 3.67% fissile purity, Foreign Minister Mohammad Javad Zarif said on Monday. The 3.67% level is that deemed suitable for generating civilian nuclear energy. Above that would mark the first step in a process that could eventually be put to producing the more highly refined material that can be used for a nuclear warhead. “Our next step will be enriching uranium beyond the 3.67% allowed under the deal,” Zarif said, according to the state-run Iranian broadcaster IRIB. “The Europeans have failed to fulfil their promises of protecting Iran’s interests under the deal.”
No fresh news on naphtha cracks. Formosa has plans to restore full runs at its naphtha crackers after reducing the average throughput to 95% in June due to weaker demand caused by maintenance at downstream units.
The July crack is weaker at -$ 6.30 /bbl
Asia’s gasoline crack on Monday surged 35.4% or $1.34 to touch a six-week high of $5.12 a barrel, supported by refinery outages in the United States and production cuts in Asia. Taiwan’s Formosa Petrochemical Corp will lower its 540 kbpd refinery throughput to about 90% of its capacity this month versus close to 96.5% in June in view of the recent weak gasoline margins. A reduction in petrol production usually affects refinery runs as refiners would normally want to minimise the yield of fuel oil as that is used as feedstock in gasoline-making units such as the residue fluid catalytic crackers (RFCCs). .
The July crack is weaker at $ 6.65 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for 10ppm gasoil narrowed by 3 cents to 10 cents a barrel to Singapore quotes on Monday.
Cash differentials for jet fuel flipped back to a narrow discount of 1 cent a barrel to Singapore quotes on Monday, hurt by muted buying interest for physical cargoes in the Singapore trading window. They were at a premium of 5 cents per barrel on Friday.
The July crack for 500 ppm Gasoil is slightly lower $ 14.85 /bbl with the 10 ppm crack at $ 15.55 / bbl. The regrade is at +$ 0.40 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s cash premiums for 380 cst fuel oil dipped on Monday, but remained within close sight of a near eight-month high touched on Friday, buoyed by expectations of tightness in supply and firmer seasonal demand. Cash differentials for 380-cst HSFO were at a premium of $9.20 a tonne to Singapore quotes, compared with $9.60 per tonne on Friday.
The more actively traded 380-cst barge crack to Brent crude dropped to minus $7.71 a barrel during Asian trading hours, hurt by firmer crude prices. The cracks were at minus $5.51 per barrel on Friday.
The July180 cst crack is weaker at + $ 0.50 / bbl with the visco spread at $ 1.00 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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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.