Oil prices edged higher on Wednesday, notwithstanding bearish US stock data, ahead of a U.S. holiday. Brent crude futures rose $ 1.42 to settle at $63.82 a barrel. WTI crude futures rose $ 1.09 to settle at $57.34 a barrel.
Strength in the U.S equities market helped support oil prices. Each of the major U.S. stock indexes finished at a record closing high on expectations of a cut in Federal interest rates.
Trading volumes were subdued ahead of the U.S. Fourth of July holiday on Thursday. About 573,076 lots of the front-month U.S. crude futures contract were traded by 2:45 p.m. ET (1845 GMT), some 65.2 percent of the previous session’s volume.
The U.S. trade deficit jumped to a five-month high in May and the ADP National Employment Report showed private payrolls increased far less than economists had expected.
Crude prices also were pressured by signs of a recovery in oil exports from Venezuela in June and growth in oil production in Argentina in May.
The DOE data was bearish insofar as it not only were draws a lot lower than those reported by the API, but they were also well below market expectations. In fact, if we take a look at our material balance statement below, it tends to show a massive build for crude.
Gasoline stocks were hurt more by a reduction in production than by an increase in demand. Diesel stocks built due to a combination of a decrease in exports and a decrease in demand.
Asia’s naphtha crack recovered to a four-session high of $29.58 a tonne on Wednesday.
Supplies of heavy full-range naphtha were less ample versus the open-specification grade. South Korea’s GS Caltex on Tuesday bought heavy full-range naphtha for second-half August delivery at premium levels (C&F) but the exact range could not be directly confirmed. The GS Caltex purchase was made on the same day as SK Energy where the latter paid about $9 a tonne premium to Japan quotes on a C&F basis for heavy full-range naphtha. While heavy full-range grade prices have been holding in premium levels, benchmark open-specification naphtha spot prices have been trapped in discounts since May in South Korea.
The July crack is much stronger at -$ 5.15 /bbl
Asia’s gasoline margins stayed near a 7-week high of $5.91 a barrel on stronger gasoline demand in Europe.
Gasoline demand in the West in the meantime was firm. Exports from Europe to the U.S. East Coast had risen in recent days to plug a supply gap after the 335 kbpd Philadelphia Energy Solutions Inc refinery was shut down.
Light distillate stocks in Fujairah rose by 132 kb to 7.2 million barrels.
The July crack has jumped to $ 8.25 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for 10ppm gasoil were at 16 cents a barrel to Singapore quotes, compared with a discount of 18 cents per barrel a day earlier.
Cash differentials for jet fuel climbed to a premium of 13 cents a barrel to Singapore quotes on Wednesday, buoyed by firmer buying interest in the physical market. They were at a discount of 2 cents per barrel on Tuesday.
Middle distillate stocks in Fujairah dropped by 1.09 million barrels to 9.8 million barrels.
The July crack for 500 ppm Gasoil has crashed to $ 14.35 /bbl with the 10 ppm crack at $ 15.05 / bbl. The regrade is at +$ 0.45 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 380-cst fuel oil near-dated time spreads and spot cash premiums climbed on Wednesday as concerns of tightening near-term supplies continued to boost market sentiment. The 380-cst Aug/Sept time spread climbed to about $20 a tonne while the later dated Sept/Oct time spread rose to about $18 per tonne. The Aug/Sept time spread was at $17.25 a tonne in the previous session, while the Sept/Oct spread was at $17.25 a tonne.
The 380-cst cash premiums for physical cargoes of the fuel also climbed to a two-session high of $8.79 a tonne to Singapore quotes, up from $8.55 per tonne on Tuesday.
Fuel Oil stocks in Fujairah dropped by 1.44 million barrels to 18.58 million barrels.
The July180 cst crack has jumped to + $ 2.95 / bbl with the visco spread at $ 0.95 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Fuel Oil cracks have really burgeoned. We shall lay one more tranche of the August crack at + $ 0.60 /bbl. In the meanwhile, our recent gasoil hedges have really worked out well for us.
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.