Crude Oil
Oil prices rose on Monday, supported by concerns that falling Iranian output will tighten markets once U.S. sanctions bite from November, but gains were limited by higher supply from OPEC and the United States. Brent crude oil settled up 51 cents at $78.15 a barrel. WTI, being closed, did not mark a settle.
The two benchmarks have risen strongly over the last two weeks with Brent gaining more than 10 percent on expectations that global supply will tighten later this year.
During the U.S. trading day the markets saw thin volumes due to the U.S. Labor Day Holiday.
The Saudi-led coalition fighting in Yemen said on Monday it had intercepted and destroyed a ballistic missile fired at the southern Saudi city of Jizan by the Iranian-aligned Houthis, who said separately they were targeting a Saudi Aramco facility.
OPEC production rose 220 kb per day in August to a 2018 high of 32.79 million bpd. Output was boosted by a recovery in Libyan production and as Iraq’s southern exports hit a record high.
Naphtha
Asia’s open-specification naphtha price for second-half October was about $2.50 a tonne higher than the following month, making this the widest inter-month premium since Aug. 23 following the recent strong demand.
The September crack has improved to -$ 0.25 /bbl
Gasoline
Asia’s gasoline crack was near a fresh two-week high of $8.82 a barrel.
The September crack is higher at $ 10.10 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian refining margins for 10ppm gasoil climbed to their highest in more than seven months on Monday, while cash premiums rose towards a three-month peak, backed by firmer demand.
Cash premiums for 10ppm gasoil rose to 45 cents a barrel to Singapore quotes amid stronger bids, up from 40 cents a barrel on Friday.
Meanwhile, cash differentials for jet fuel were unchanged at a discount of 48 cents a barrel to Singapore quotes as the prompt-month spread stayed in contango.
The September crack is higher at $ 16.35 / bbl with the 10 ppm crack at $ 17.15 /bbl. The regrade is lower at – $ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high sulphur fuel oil market started the month weaker on Monday as expectations of higher arbitrage inflows into Singapore in September weighed on sentiment. Fuel oil time spreads , arbitrage spreads and cracks to Brent crude had all climbed to multi-month highs in July and August as inventories of the fuel shrunk as strong demand in the Middle East drew in arbitrage cargoes of the fuel away from Asia.
The September180 cst crack is lower at -$ 5.20 / bbl with the visco spread at $ 1.00 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Cal-19 Jet and 10 ppm gasoil have crossed our next target levels of $ 18.75 /bbl and $ 18.50 /bbl. respectively. Accordingly, we shall add hedges for these commodities at today’s levels of $ 18.85 /bbl and $ 18.65 / bbl respectively
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.