Crude Oil
Global oil benchmark Brent futures fell more than 3% on Monday on global growth concerns after China commenced retaliations to the US stance. Brent crude futures settled at $59.81 a barrel, down $ 2.08. WTI crude futures fell 97 cents to settle at $54.69 a barrel.
WTI found some support from the draw in inventories at Cushing which fell nearly 2.4 million barrels in the week to Aug. 2. WTI’s discount to Brent narrowed to $5.15 a barrel, its narrowest since July 2018.
The US-China tension is clearly escalating with China devaluing the Yuan, making purchase of US goods more difficult. Chinese companies have stopped buying US agricultural products and may also impose additional tariffs on US farm products, China’s Commerce Ministry said on Tuesday, a blow to US farmers who have already seen their exports slashed by the trade war.
The US is also facing resistance to its attitude of wanting to apply sanctions to everybody around the world. Russian President Putin warned on Monday that Moscow would start developing short and intermediate-range land-based nuclear missiles if the United States started doing the same after the demise of a landmark arms control treaty.
The US services sector activity slowed in July as new orders dropped to their lowest level in three years, suggesting the economy lost further momentum early in the third quarter.
Naphtha
Asia’s naphtha crack fell to a 1-1/2 week low of $29.13 a tonne as spot purchases for September cargoes slowed.
Most buyers appear to have replenished stocks for the first half of September. Apart from Asahi Kasei, few buyers have emerged to seek cargoes scheduled for second-half September delivery.
LPG prices have been low, giving petrochemical makers incentives to replace some of their naphtha feedstock with the former.
Formosa has scheduled maintenance at its 1.03 million tonnes per year cracker from mid-August to end September.
The August crack is lower at -$ 6.05 /bbl
Gasoline
No fresh news on the gasoline markets.
The August crack is lower at $ 6.55 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10 ppm gasoil flipped to a narrow discount on Monday, hurt by weaker buying interest for physical cargoes in the Singapore trading window. The cash differentials were at a discount of 1 cent a barrel on Monday, compared with a premium of 7 cents per barrel on Friday.
Cash premiums for jet fuel were at 23 cents a barrel to Singapore quotes on Monday, compared with 26 cents per barrel on Friday.
The August crack for 500 ppm Gasoil is lower at $ 15.40 /bbl with the 10 ppm crack at $ 16.30 / bbl. The regrade is at $ 0.00 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for cargoes of Asia’s mainstay 380-cst high-sulphur fuel oil extended losses on Monday amid elevated trade liquidity.
Cash premiums for 380-cst HSFO were near a one-month low of $16.40 a tonne to Singapore quotes, down from $19.80 per tonne on Friday.
Premiums for 180-cst HSFO were also near a one-month low, of $12.70 a tonne, down from $15.90 a tonne in the previous session.
Despite the losses, the fuel oil market is expected to remain supported over the near term due to tight supplies in the Singapore trading hub.
The August 180 cst crack has plummeted to – 0.45 / bbl with the visco spread at $ 1.30 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh recommendations for today
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.
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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.