Crude Oil
Oil once again surged on Wednesday ignoring surprisingly bearish data on US inventories. Brent crude gained $ 1.49 to settle at $86.29 a barrel. WTI crude futures added on $ 1.17 to settle at $76.40 a barrel.
There appears to be absolutely no fresh news that would have given support to this spurt in prices.
Saudi Arabia’s energy minister reiterated that the kingdom will readily increase production to support market stability as required, and has already increased production to 10.7 mb/d in response to customer demand. Al-Falih added that Nov output will depend on talks with buyers, but are expected to be “slightly” above October levels.
The DOE reported a large build of around nearly 8 million barrels catching the markets totally by surprise. The build appears to be attributable to a drop 900 kb/d of crude exports last week as can be seen in the material balance statement given below.
Gasoline stocks appear to be more or less balanced for the week. In terms of seasonality though, this is a time when gasoline stocks tend to plummet. That this has not happened and the fact that gasoline stocks are at a seasonal high would be bearish for gasoline.
Distillate stocks have largely drawn due to an increase in exports. The drop in domestic demand at this time of the year is extremely disappointing. For detailed charts please check out our US DOE Data page.
Naphtha
Asia’s naphtha crack extended losses for the second day to a three-session low of $105.05 a tonne on Wednesday as soaring oil prices hurt margins.
The October crack is lower at -$ 2.15 /bbl
Gasoline
Asia’s gasoline crack was at a five-session low of $7.04 a barrel.
Vitol continued its buying spree in the Singapore cash market and bought a total of 7 cargoes. This has brought its total purchases to around 24 cargoes or 1.2 million barrels. This can fill at least four medium-range tankers.
Gasoline stocks in Japan rose 150,000 barrels to a 2-week high of 10.21 million barrels in the week to Sept. 29, official data showed. Light distillates stocks in Fujairah also jumped 26 percent by 1.54 million barrels to reach a three-month high of 7.43 million barrels in the week to Oct. 1.
The October crack dropped plummeted to $ 8.45 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil slipped on Wednesday, hurt by weaker deals in the physical market. The cash premiums for 10ppm gasoil were at 68 cents a barrel to Singapore quotes on Wednesday, compared with a premium of 84 cents a barrel on Tuesday. The Oct/Nov time spread narrowed to $1.32 a barrel on Wednesday, from $1.45 a barrel a day earlier.
Cash discounts for jet fuel also widened to 77 cents a barrel to Singapore quotes, compared with a discount of 67 cents on Tuesday. Middle distillates inventories in Fujairah fell about 3 percent from a week ago in the week to Oct. 1 to 3.87 million barrels in the week ended Monday. Since the start of the year, middle distillate inventories in the Fujairah oil hub have averaged 2.7 million barrels a week, compared with a weekly average of about 3.3 million barrels in 2017. Compared with year-ago levels, weekly Fujairah middle distillate inventories were about 56 percent higher.
The October crack has dropped to $ 15.95 / bbl with the 10 ppm crack at $ 16.75 /bbl. The regrade is higher at -$ 1.60 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for 380-cst fuel oil edged up to a near two-month high on Wednesday on firm buying interest for physical cargoes of the fuel in the Singapore trading window.
Fuel oil inventories at Fujairah jumped by 1.381 million barrels (21%) to a three-week high of 7.97 million barrels. Fujairah fuel oil inventories are now 14 percent lower from the same time last year, the narrowest year-on-year deficit in eight weeks.
The October 180 cst crack is lower at -$ 3.40 / bbl with the visco spread at $ 0.95 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Cal 19 distillate cracks continue to recede but are still extremely strong.
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.