Oil prices continued their retracement yesterday as prospects increased supply continued to weigh on managed money. Brent crude futures dropped $1.50 to at $75.29 /bbl. U.S. West Texas Intermediate (WTI) crude futures fell by $ 1.06 to settle at $64.75 /bbl.
We expect that barring fresh news, the current rally has run out of steam. The first direction will come late tonight with the API data.
Asia’s naphtha crack recovered to a two-session high of $94.82 a tonne on Monday after dipping to its lowest in nearly a month in the previous session. Fundamentals were holding firm, reflected in some of the premiums buyers were willing to fork out for cargoes. Indian cargoes are trading at premia of low $30s to MOPAG quotes while second half July cargoes in the South east are trading at premiums of mid teens to MOPJ.
The balance June crack is lower at -$ 1.55 / bbl
Asia’s gasoline fell to its lowest in about three weeks at $7.46 a barrel as seasonal demand failed to offset high oil prices and supplies. In China, for example, gasoline inventories rose 5 percent in April.
The June crack has dropped to $ 9.95 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s jet fuel cash differential to Singapore benchmark prices flipped to a discount for the first time since January as high oil prices weighed. Fuel costs have risen much faster than ticket prices. Airlines were seen locking in fuel hedges, lowering capacity, raising fares and retiring older jets to cope with rising costs alongside the highest oil prices since 2014.
The balance June crack has risen to $ 14.10 / bbl with the 10 ppm crack at $ 14.95 /bbl. The regrade has dropped to $ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Strong buying interest for physical cargoes 180-cst high-sulphur fuel oil (HSFO) which helped lift cash premiums of the fuel to its highest level since May 2017. Meanwhile, bullish sentiment continued to boost the fuel oil market on expectations of narrow arbitrage supplies and a lack of finished grade bunker fuels over the near term. The prompt-month time spreads of both 180-cst and 380-cst HSFO grades climbed to more than one-year highs on Monday.
Also, fuel oil margins continued to strengthen with the July 380-cst barge crack narrowing its discount to Brent crude to about $10.25 a barrel on Monday, up from $10.70 a barrel on Friday.
The balance June 180 cst crack is higher at -$ 2.75 / bbl. The visco spread has widened to $ 1.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We find the level of 180 cSt cracks for 3Q18 at extremely attractive levels to hedge at -$ 3.10 /bbl
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.