Oil prices recovered around 3% on Friday in the wake of President Trump’s move to impose additional tariffs Chinese imports. Brent crude futures for October delivery settled at $61.89 a barrel, up $1.39. WTI crude futures for September delivery settled at $55.66 a barrel, rising $1.71.
For the week, Brent lost about 2.7%, while WTI shed about 1.2%. Before Thursday’s decline, crude futures had seen a fragile rally supported by steady drawdowns in U.S. inventories but pressured by a shaky global demand outlook.
Trump said he would impose a 10% tariff on $300 billion of Chinese imports and said he could raise tariffs further if China’s president, Xi Jinping, failed to move more quickly toward a trade deal. The announcement extends U.S. tariffs to nearly all imported Chinese products. China said it would not accept “intimidation or blackmail” and pledged countermeasures. China, once the top buyer of U.S. crude, slashed its purchases last year as the trade war dragged on.
The escalating trade war, however, could push the U.S. Federal Reserve toward more interest rates cuts, which would likely boost oil prices.
President Trump on Friday blasted the EU for its use of trade barriers and revived his threat to impose US tariffs on European automobiles if he does not see progress in stalled negotiations between the longstanding partners
US energy firms this week reduced the number of oil rigs operating for a fifth week in a row as most independent producers cut spending even though majors were still pushing ahead with investments in new drilling. Drillers cut six oil rigs, bringing the total count down to 770, the lowest since Feb’18. During the same week a year ago there were 859 active rigs.
Hedge funds and money managers cut bullish wagers on US crude in the week to July 30, the US CFTC said on Friday, as oil prices were pressured by persistent worries about demand. Speculators, however, raised their net long positions in Brent crude to the highest level in about two weeks.
Asia’s naphtha crack retreated to a three-session low of $30.63 a tonne on Friday, after hitting a more than two-week high the previous day, with spot demand mostly muted following a string of recent purchases.
These included deals made by the Japanese, South Koreans and Malaysia-based Titan. Maintenance carried out by JXTG Nippon may have prompted buyers to seek spot cargoes although this could not be directly confirmed.
JXTG has been carrying out scheduled maintenance at its various crude distillate units (CDUs) across Japan since March. It currently has maintenance works at a 145,000 bpd CDU in Sendai.
The August crack is lower at -$ 5.95 /bbl
Asia’s gasoline crack was down to $5.30 a barrel, the lowest since July 25. . Gasoline stocks in ARA, at 1.244 million tonnes in the week to Aug. 1, were at their highest since Feb. 14, when they were at 1.261 million tonnes.
The August crack is higher at $ 6.90 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10 ppm gasoil fell to 7 cents a barrel to Singapore quotes on Friday, hurt by a weaker deal value in the Singapore trading window. They were at a premium of 22 cents a barrel on Thursday.
Gasoil stocks in ARA rose 1.2% to 3.01 million tonnes in the week to Aug. 1. The gasoil inventories were at their highest since mid-October 2018 as demand up the Rhine river to inland locations fell slightly.
The August/September time spread for the aviation fuel traded at a premium of 20 cents a barrel on Friday, down from 30 cents a day earlier. Cash premiums for jet fuel dipped to 26 cents a barrel to Singapore quotes on Friday, against 32 cents per barrel on Thursday.
Cash premiums for jet fuel dipped to 26 cents a barrel to Singapore quotes on Friday, against 32 cents per barrel on Thursday. The physical jet fuel market in Singapore remained muted with no trades on Friday.
ARA jet fuel inventories dropped 1.4% to 781,000 tonnes in the week to Thursday. Jet kerosene was the only product to register a fall in stocks over the week as demand was firm and imports were limited. Compared with year-ago levels, jet fuel stocks were up about 13%, while gasoil inventories were about 21% higher.
The August crack for 500 ppm Gasoil is lower at $ 15.75 /bbl with the 10 ppm crack at $ 16.65 / bbl. The regrade is at -$ 0.00 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s high-sulphur fuel oil weakened on Friday with cash differentials, fuel oil crack and front-month time spread of all commodities falling lower. Despite the losses on Friday, which came amid thin trade liquidity, market fundamentals remain supported by a tight supply outlook over the near term.
The front-month September 380-cst HSFO barge crack fell to its widest discount against Brent crude since May 2018 at minus $12.69 per barrel on Friday. The barge crack was at minus $12.15 a barrel in the previous session.
Fuel oil inventories in ARA jumped 19% to a four-week high of 1.206 million tonnes in the week ended Aug. 1.
Stocks rose due to high imports into the region, but a VLCC was expected to load fuel oil soon to go to Singapore. ARA fuel oil inventories in the week to Aug. 1 were 1% higher than a year ago and above the five-year average of 1.018 million tonnes for this time of the year.
The August 180 cst crack has risen to + $ 2.45 / bbl with the visco spread at $ 1.45 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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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.