Crude Oil
Oil prices, after having a roller coaster ride during the day, ended little changed on Tuesday, as energy infrastructure on the U.S. Gulf Coast braced for a hurricane, but gains were capped as a stronger dollar and report of rising stockpiles at the Cushing, Oklahoma hub weighed. Brent crude , which traded on Monday, was ended 2 cents firmer to settle at $78.17 a barrel, down from a session high of $79.72. WTI crude futures rose 7 cents to settle at $69.87 a barrel after earlier hitting a session high of $71.40.
Both benchmarks jumped earlier in the session as more oil producers pulled employees out of Tropical Storm Gordon’s path and shut-in 9 percent of U.S. Gulf of Mexico oil and gas production on Tuesday. But the storm, expected to make a nighttime landfall as a category 1 hurricane, shifted eastward, reducing its threat to major production areas and most Gulf Coast refineries.
Prices moved lower, however, as market participants saw the market as overbought. Weighing on oil prices, Cushing, Oklahoma, crude inventories rose nearly 754,000 barrels from Aug. 24 to Friday. A rising U.S. dollar index also pushed crude futures lower.
Naphtha
Asia’s naphtha crack rose to a near three-week high of $104.50 a tonne on Tuesday, supported by the recent flurry of demand after a brief slump early last week caused by high supplies. Total naphtha cargoes for September arrival in Asia from various regions including the Middle East and Europe are expected to be higher versus up to 5.1 million tonnes seen for August.
The September crack has improved to -$ 0.10 /bbl
Gasoline
Asia’s gasoline crack eased to a three-session low of $8.65 a barrel as high oil prices weighed. But gasoline cash demand was strong with a total of 12 cargoes changing hands, making this the largest volume transacted in a single session in more than a year. Emirates National Oil Company (ENOC) remained as the top buyer, having scooped up 9 of the 12 cargoes.
The September crack is lower at $ 9.70 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian refining margins for 10ppm gasoil surged to their highest levels in about three years on Tuesday, buoyed by stronger demand amid potentially limited supply.
Cash premiums for 10ppm gasoil climbed to 56 cents a barrel to Singapore quotes, the highest since S&P Global Platts switched the benchmarks in gasoil grades in January to maximum sulphur content of 10 ppm sulphur, from 500 ppm sulphur previously. The premiums were at 45 cents a barrel on Monday.
Firmer demand coupled with relatively lesser supply in the region is making the gasoil market bullish at present, and the fundamentals would likely gain further strength in the fourth quarter.
Cash differentials for jet fuel narrowed their discounts on Tuesday and were at a discount of 37 cents a barrel to Singapore quotes, compared with a 48 cents discount a day earlier. Meanwhile, jet margins are currently at their strongest levels for this time of the year since 2014, thanks to the region’s robust aviation demand. Asia-Pacific airlines’ July traffic rose 7.5 percent over the year-ago period with domestic travel demand in China and India posting about 15 percent and 18 percent growth rates in July respectively, according to data from the International Air Transport Association (IATA) released last week.
The September crack has however receded to $ 16.00 / bbl with the 10 ppm crack at $ 16.80 /bbl. The regrade is higher at – $ 0.80 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The fuel oil market steadied on Tuesday after losses in the previous session due to expectations of rising arbitrage supplies into Singapore in September.
The prompt month 380-cst time spread edged up to $4.50 a tonne on Tuesday, pulling away from a more than two-month low of $4.25 a tonne hit in the previous session. Meanwhile, the weaker fuel oil market sentiment and rising crude prices also weighed on cracks of the residual fuel.
The September 380-cst fuel oil barge crack discount to Brent crude slipped 9 cents a barrel from the previous session to minus $11.29 a barrel on Tuesday. The crack was last seen lower in May.
The September180 cst crack is lower at -$ 5.65 / bbl with the visco spread at $ 0.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The Cal-19 Distillate cracks have retraced slightly.
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.