Crude Oil
Oil futures ended little changed on Wednesday in a day of relatively thin trade as Asia and Europe were shut for Labor day. Brent crude futures settled at $72.18 a barrel, up 12 cents. WTI crude futures, however, fell 30 cents to settle at $63.60 a barrel.
In April, Brent increased about 6.5% and WTI rose 6.3%, their fourth consecutive month of gains.
After initially dropping to a low of $ 71.18 a barrel, Brent reversed its downward course after Oman energy minister Mohammed bin Hamad al-Rumhy said that the OPEC was intending to extend supply cuts at its June meeting.
Talks of extension to OPEC-led cuts, offset rising U.S. crude inventories and record production. An intensifying political crisis in Venezuela that threatens oil exports was also supportive.
Washington last week said no waivers on the Iranian oil sanctions would be granted after Wednesday, but it remains unclear whether Iran’s top oil customer China will comply. Iran’s oil minister Bijan Zanganeh on Wednesday said “those who use oil as a weapon against two founding members of OPEC are disturbing the unity of OPEC and creating the death and collapse” of it.
U.S. crude inventories jumped 9.9 million barrels last week to 470.6 million barrels, their highest levels since September 2017.
This happened as crude output rose to a record high of 12.3 mbpd. Imports also grew to their highest level since January and refining rates once again dropped below 90%.
Gasoline stocks built for the first time in 11 weeks as demand for gasoline once again eased. Distillate demand, however, remains strong. However, although distillate stocks continue to drop, the drop is nowhere as steep as it was at the same time last year.
Naphtha
Asia’s naphtha crack ended the month at a two-week low of $48.70 a tonne on the back of muted demand ahead of Labour day, while gasoline fell to a two-session low of $6.66 a barrel.
Spot premiums were however comparatively stronger last week versus the week before as reflected in deals in Taiwan and India. Indian Oil Corp, for instance, sold 35,000 tonnes of naphtha for May 18-20 loading from Chennai last Friday to a European trading house at premiums of about $19 a tonne to its own price formula on a free-on-board (FOB) basis. It had previously sold the same volume but for May 8-10 loading from the same port to Socar at a premium in the mid-to-high teens a tonne level.
The May crack is lower at – $ 6.45 /bbl
Gasoline
No Fresh news on the gasoline market. Light distillate stocks in Fujairah once again rose to record levels seen in January at 11.975 million barrels.
The May crack is higher at $ 7.50 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10ppm sulphur content were at a discount of 17 cents a barrel to Singapore quotes on Tuesday, as against a 15-cents discount on Monday.
The gasoil market in Asia has taken a beating in recent months amid plentiful supplies on the back of relatively quiet demand. Continued stronger exports of middle distillates from China, South Korea, and Japan would likely compensate for tighter supply from India. India has a heavy refinery maintenance schedule this year as state refiners are preparing to churn out cleaner Euro VI-compliant fuels from January 2020 to be able to sell them from April of that year.
The front-month time spread for the benchmark gasoil grade in Singapore , which has remained in contango for the last 1-1/2 months, widened by a cent to minus 35 cents a barrel on Tuesday.
Cash differentials for Jet fuel were at a premium of 2 cents a barrel to Singapore quotes, as against a premium of 7 cents per barrel on Monday.
Middle Distillate stocks in Fujairah remained virtually unchanged for the week at 1.99 million barrels.
The May crack for 500 ppm Gasoil is higher at $ 12.40 /bbl with the 10 ppm crack at 13.10 / bbl. The regrade is lower at $ 0.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Term ex-wharf premium’s for Singapore 380-cst high-sulphur fuel oil (HSFO) bunkers for April loading were lower from the previous month, under pressure from ample supplies and sluggish demand for the marine fuel.
May ex-wharf term premiums for 380-cst HSFO were concluded at about $1.25-$2 per tonne to Singapore quotes, compared with term premiums of about $2.50-$3 per tonne in April.
While the marine fuels demand outlook in May remains uncertain, elevated Singapore inventories of fuel oil have also weighed on market sentiment.
Fuel Oil stocks in Fujairah dropped by 643 kb to 11.64 million barrels.
The May 180 cst crack is weaker at – $ 1.95 / bbl with the visco spread at $ 1.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
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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.