Crude prices continued their meteoric rise as Canada and US updated the NAFTA treaty which would augur well for economic growth. Brent crude settled $ 2.25 higher at $82.98 a barrel. WTI crude futures rose $ 2.05 to settle at $75.30 a barrel.
The spurt in prices has taken them to levels not seen since November 2014.
In other news, Russia would be unable to materially increase crude supplies to Asia to replace Iranian barrels, as the transportation infrastructure is already used at full capacity, according to the Russian deputy energy minister. However, Russia could send more barrels to Europe if the economics become more attractive with US sanctions kicking in from early November.
Iraq plans to relaunch Basrah Light with an API gravity of 34-40, according to the SOMO deputy director. The current Basrah Light, with API Gravity of 29-30, will be rebranded Basrah Medium.
Asia’s naphtha crack for the first half of October at $109.35 a tonne marked the highest front-month value since Aug. 6, reaching $109.35 a tonne as expectations of stronger demand offset high oil prices.
The October crack is however lower at -$ 0.60 /bbl
Asia’s gasoline crack, at $8.28 a barrel, was at its highest since Sept. 20, boosted by a flurry of cash deals. There were 10 gasoline deals, the highest number of trades in a single session since Sept. 4. Vitol bought seven of the 10 cargoes.
The October crack is higher at $ 9.25 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for gasoil with 10ppm sulphur content rose to 80 cents a barrel to Singapore quotes on Monday, from a premium of 66 cents a barrel on Friday. The gasoil crack today has spiked up sharply today. The reasons for the same are not clear as of this time.
Meanwhile, cash discounts for jet fuel continued to widen to 70 cents a barrel to Singapore quotes, compared with a discount of 55 cents on Monday.
The October crack has jumped to $ 16.35 / bbl with the 10 ppm crack at $ 17.15 /bbl. The regrade is at -$ 1.30 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
The front-month East-West arbitrage spread rose to its widest in at least three years on Monday, as expectations of tightening fuel oil supplies in Asia continued to underpin sentiment. A total of 3 million tonnes-3.5 million tonnes of Western fuel oil supplies are expected to arrive in Singapore this month, down from about 3.5 million tonnes-4 million tonnes in September.
The 380-cst East-West arbitrage spread for November climbed to $24.75 a tonne, its highest since records began in late-2015. This compared with $24 a tonne on Friday.
The October 180 cst crack is lower at -$ 4.00 / bbl with the visco spread at $ 1.20 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
The sharp spike in gasoil prices today seems to have spread over the curve with Cal 19 Jet above $ 19.00 / bbl and 4Q18 Jet above 21.00 /bbl. 10 ppm gasoil too seems to be at the same levels. As of now, we are unclear whether this is an aberration or the levels are here to stay. Since we have already hedged one tranche of 4Q19 at 20.50 + levels, we shall wait and watch for a day before taking action on these prices.
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.