Oil futures sank on Tuesday as weak U.S. economic data dimmed crude’s demand outlook and pressured prices. Brent futures settled 36 cents lower at $ 58.89 a barrel. WTI crude fell $ 1.84 to settle at $54.07/bbl.
Oil pared some losses in post-settlement trade after American Petroleum Institute (API) data showed crude stocks unexpectedly fell last week by 5.9 million barrels, compared with analysts’ expectations for an increase of 1.6 million barrels.
U.S. manufacturing activity dropped to a more than decade-low of 47.8 in September according to a survey from the Institute for Supply Management (ISM).
Freight rates for U.S. crude tankers bound for Asia were bid up to a more than three-year peak this week as U.S. sanctions on a Chinese transport giant cut vessel availability, traders and ship brokers said
Ecuador said it will withdraw from OPEC from Jan. 1 because of fiscal problems.
U.S. crude oil output fell 276,000 bpd in July to 11.81 million bpd as federal offshore Gulf of Mexico production slid, the U.S. Energy Information Administration reported on Monday. U.S. production peaked at 12.12 million bpd in April.
Given that the market expected a build for this week, the draw in crude stocks is bullish for the market. Markets will await the official data expected today.
Asia’s naphtha crack for second-half November hit $59.03 a tonne on Tuesday, the highest front-month value since Sept. 17.
Overall, the amount of naphtha shipped to Asia last month from the Middle East stood at 2.4-2.5 million tonnes, down by about 15% versus August but close to July levels of up to 2.4 million tonnes.
The October crack is higher at – $ 4.30 / bbl.
No fresh news on the gasoline markets.
The October crack is flat at $ 8.10 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for 10ppm gasoil were at a premium of 44 cents a barrel to Singapore quotes on Tuesday, their strongest since Aug. 20. They were at a premium of 38 cents a barrel on Monday.
The gasoil market in the region is riding on expectations of firmer demand as shippers prepare switching to cleaner marine fuels next year.
The current scope of arbitrage shipments is also providing some short-term boost to the regional gasoil market. The gasoil EFS,traded around minus $19 per tonne. The arbitrage is usually profitable when the EFS trades at about minus $15 a tonne or below.
An Aframax vessel, Salamina, was provisionally chartered by Winson Oil to carry 90,000 tonnes of ultra low sulphur diesel (ULSD), loading from Sikka this month, to Britain by November. The gasoil arbitrage flows would likely help lowering Singapore inventory levels and “eliminating the surplus” in the region.
Cash premiums for jet fuel , however, fell to 26 cents a barrel to Singapore quotes, down from 30 cents per barrel in the previous session.
The October crack for 500 ppm Gasoil is lower at $ 17.85 /bbl with the 10 ppm crack at $ 18.55 / bbl. The regrade is at + $ 0.00 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Trade liquidity in Asia’s low-sulphur fuel oil (LSFO) continued to gain momentum with the second ever LSFO cargo trade being reported in the Singapore window on Tuesday. This comes less than a week after the inaugural LSFO cargo trade was reported in Singapore.
Meanwhile, trade liquidity in high-sulphur fuel oil (HSFO) was firm on Tuesday, but lower deal values and aggressive supplier offers pulled cash premiums of the mainstay 380-cst HSFO to a near three-week low. The HSFO market has come off its record highs in September. Demand for HSFO is expected to decline as the marine refuelling industry shifts to cleaner fuels in preparation for the 2020 deadline to switch to 0.5% sulphur content marine fuels.
The October 180 cst crack has dropped to -$ 9.35 / bbl with the visco spread at $ 1.35 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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.