Oil prices plunged to five-month lows on Thursday amidst fears that the supply glut could worsen with analysts predicting that non-OPEC members may struggle to continue with production cuts. Brent dropped by a considerable $ 2.41/bbl to settle at $48.38/bbl while WTI lost $2.30 /bbl settle at $ 45.52/bbl.
On Wednesday, the psychological support of $ 50 /bbl of Brent crude managed to contain prices following bearish DOE data. However, once the support was breached yesterday, prices dropped through many more supports. This morning too the markets appear to be following through on yesterday’s move.
Adding to the bearish sentiment was market news that OPEC unlikely to announce deeper supply cuts in crude production when it meets on 25th May later this month. Additionally, crude output has also been increasing steadily in the United States, with rig counts going up steadily for the past 11 months. .
In other news, Iraqi’s oil ministry has invited bids from overseas companies to build and operate a 300,000-barrel-per-day export-oriented refinery in Fao, near the southern city of Basra.
Although there wasn’t much action in the market due to some participants being away on account of Labour Day holidays, the naphtha cracks improved because of the sharp fall in crude prices. The outlook however continue to be bearish.
The Japan Naphtha – Dubai crack for May improved to – $ 0.20 /bbl. The Singapore Naphtha – Dubai crack also increased to -$ 1.4 /bbl.
Although the gasoline stockpiles in the U.S. are expected to have risen by about 1.3 million barrels last week despite no change in its refinery utilization rates, the cracks improved a little due to the fall in crude prices.
The Singapore crack for May is valued at $ 10.05 /bbl. which is a $0.35/bbl increase from yesterday
India, South Korea and the United Arab Emirates continued to ship cargoes to Singapore as the East-West arbitrage is still not viable. On the bullish side, higher exports of the fuel to Australia, Myanmar, New Zealand and Sri Lanka are drawing down the stocks, with more demand coming in from South Africa’s PetroSA which is seeking up to 247,000 tonnes of gasoil and gasoline for delivery over June to October. The cracks however continued to slip amidst concerns of excess stock
The May crack is valued at $ 9.70 / bbl which is a $0.30/bbl drop from yesterday. The regrade continued to improve and is now at -$ 0.30 / bbl for May and +$0.50/bbl for June
180 CST Fuel Oil
The visco spread, the differential between the price of 180-cst and 380-cst fuel oil, continued to rise amid concerns over tightening of cutter stocks, which are used to blend high-viscosity material into bunker fuels. Traders are of the opinion that the availability of the blend-stock has tightened over the last few weeks. The cracks also showed an improvement.
The May 180cst-Dubai crack has strengthened to-$ 2.10 / bbl with the Visco spread at $8.75/ton. The June crack is a -$ 3.0 /bbl
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.