Brent crude reversed losses on Tuesday, after hitting its lowest price in nearly a month following a report the U.S. government asked Saudi Arabia and other major exporters to increase oil output. Brent crude futures rose 9 cents to settle at $75.38 a barrel. WTI futures rose 77 cents to settle at $ 65.22 /bbl
On Tuesday, Bloomberg reported the U.S. government had asked the producers to increase oil production by about 1 million barrels per day (bpd). OPEC supply tends to more directly influence Brent, whereas U.S. crude futures are more closely tied to U.S. supply. The request comes after U.S. retail gasoline prices surged to the highest in more than three years and President Donald Trump in April complained about OPEC policy and rising oil prices.
The API reported that Crude stocks fell by around 2 million dollars, a little more than the market expected. Distillate stocks also fell, though the markets expected a build. Surprisingly, gasoline stocks built by close to 4 million dollars when the market was expecting a draw. The build is even more surprising given that the driving season is under way.
Asia’s naphtha crack fell 4 percent to a two-session low of $91 a tonne on Tuesday as demand was largely muted. Eyes could be on talks for cargoes lifting August 2018 to July 2019 from Kuwait by Kuwait Petroleum Corp, which has recently been selling several spot cargoes for May and June loadings.
The balance June crack is still lower at -$ 1.75 / bbl
Asia’s gasoline crack fell for the ninth straight session to hover at its lowest since May 15 as high supplies and oil prices dragged. The value eased 6 cents from the previous session to $7.40 a barrel.
The June crack has dropped to $ 9.30 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asian refining margins for jet fuel inched higher on Tuesday after falling to the lowest in more than two months in the previous session, while cash differentials remained at a discount for the second consecutive day. The Singapore profit margin for jet was at $15 a barrel over Dubai crude during Asian trading hours, up from $14.74 on Monday. Cash differentials were at a discount of 3 cents a barrel to Singapore quotes, narrowing from a discount of 20 cents a barrel on Monday.
Meanwhile, cash premiums for gasoil with 10 ppm sulphur content rose to 29 cents a barrel to Singapore quotes on Tuesday, up from 20 cents on Monday. The market, however, will come under pressure around the third quarter of this year as refineries shut for seasonal turnarounds return from maintenance and push up supplies..
The balance June crack has dropped to $ 13.70 / bbl with the 10 ppm crack at $ 14.95 /bbl. The regrade has dropped to $ 0.15 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Singapore 380-cst ex-wharf premiums improved on Tuesday, as buyers seek to lock in supplies amid weaker crude oil prices. This comes amid ongoing shortages of finished grade bunker fuels that are expected to last well into the next month. Ex-wharf premiums were at about $2-$3 per tonne to Singapore quotes so far this week, up from about $0-$1 a tonne in the previous week. Sluggish demand for bunker fuels due to sharply higher crude oil prices in May has weighed on ex-wharf and delivered bunker fuel premiums.
The balance June 180 cst crack is higher at -$ 2.40 / bbl. The visco spread has narrowed to $ 1.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
180 cSt cracks for 3Q18 have improved to -$ 2.70 /bbl. If they rise above -$2.50, we will hedge a little more.
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.