Crude Oil
Oil prices fell more than 2% on Wednesday after official data showed a rise in U.S. crude inventories. Brent futures settled $1.20 lower at $ 57.69 a barrel. WTI crude fell 98 cents to settle at $52.64/bbl.
Wall Street’s main indexes tumbled more than 2% as data suggested fallout from the U.S.-China trade war was hurting the U.S. labor market. World equity benchmarks hit their lowest levels in a month.
U.S. crude inventories rose 3.1 million barrels last week, the Energy Information Administration said, far exceeding analyst expectations for an increase of 1.6 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub for WTI fell by 201,000 barrels, EIA said.
Iran’s Oil Minister Bijan Zanganeh sought to defuse tensions with Saudi Arabia, calling his counterpart in Riyadh “a friend” and saying Tehran was committed to stability in the region. Both oil ministers, who have repeatedly clashed at OPEC meetings over output policies, were attending a top Russian energy conference chaired by President Vladimir Putin. Iran’s oil minister said he expected a slight surplus in oil supply next year.
The United States will impose 10% tariffs on aircraft and 25% on other industrial and agricultural products from the European Union as part of a World Trade Organization penalty award in a long-running aircraft subsidy case, an official with the U.S. Trade Representative’s office said.
DOE data
The report from the DOE confounded the markets today. After the API reported a draw of 5 million+ barrels, the DOE has reported a build of 3.1 million barrels. This is also in excess of the build expected by the market.
Naphtha
Asia’s naphtha crack rose for a fifth straight session to touch a nine-month high of $66.40 a tonne on Wednesday, supported by strong demand for spot cargoes.
Naphtha sold from India this week remained at high premium levels. Hindustan Petroleum Corp Ltd sold two cargoes for second-half October loading from Vizag this week at premiums in the high $20s a tonne to its own price formula on a free-on-board (FOB) basis. One of the cargoes was sold to BP and another to a Western trading house. The fresh premiums were up from the low $20s a tonne premium it had previously fetched from Aramco Trading following the attacks. The current premiums are also the highest HPCL had fetched since 2015 for naphtha sold out of Vizag. HPCL has an outstanding tender to sell a cargo out of Mumbai for Oct. 20-22 loading. IOC is also looking to sell a total of 70,000 tonnes of naphtha this week. India’s October shipment at more than 420,000 tonnes so far have surpassed its September exports but are well below August’s volumes at 680,000 tonnes.
The October crack is higher at – $ 3.95 / bbl.
Gasoline
Asia’s gasoline crack was at 1-1/2 week high of $8.57 a barrel, supported by brisk cash deals. A total of nine deals changed hands, the highest number of trades concluded in a single session since Sept. 11.
The October crack is higher at $ 8.50 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s 10ppm gasoil crack remained above $18 a barrel for the eighth straight session, thanks to lower Dubai oil prices as Saudi Arabia restored its lost production faster-than-expected following attacks on its facilities. Demand for gasoil is expected to strengthen as it could be an alternative fuel for the shipping industry. New regulations from the International Maritime Organization (IMO) require ships to use cleaner fuel from 2020, and low-sulphur gasoil is one of the solutions. Buying interest for the fuel from Europe was seen stronger. Some 650,000 tonnes of diesel/gasoil from the Middle East and Asia, including India, will be discharged this week in Northwest Europe and the Mediterranean.
The October crack for 500 ppm Gasoil is lower at $ 17.30 /bbl with the 10 ppm crack at $ 18.00 / bbl. The regrade is at + $ 0.30 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst high-sulphur fuel oil (HSFO) barge crack to Brent crude prices plumbed a record low on Wednesday, hit by expectations of falling demand for the fuel ahead of the switch to low-sulphur marine fuels from 2020.
The November 380-cst barge crack fell to $26.50 a barrel below Brent crude on Wednesday, down from minus $26.08 a barrel in the previous session.
Cash premiums for physical cargoes of 380-cst HSFO in Asia fell to near one-month lows as weaker deal values in the Singapore window weighed. 380-cst HSFO cash premiums fell to $39.23 a tonne to Singapore quotes, down from $40.94 a tonne in the previous session and their lowest since Sept. 9.
The October 180 cst crack is higher at -$ 7.35 / bbl with the visco spread at $ 1.35 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
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.