Crude Oil
Oil prices fell more than one percent on Wednesday after a U.S. Gulf storm weakened and moved away from oil-producing areas and as concerns mounted about global trade disputes and Turkey’s currency crisis hurting demand. Brent crude futures fell 90 cents to settle at $77.27 a barrel. WTI crude futures fell $1.15 to settle at $68.72 a barrel
Crude prices had jumped on Tuesday as oil companies shut dozens of offshore platforms in anticipation of damage from Tropical Storm Gordon. The storm, however, never became a hurricane and by Wednesday energy companies and port operators along the U.S. Gulf Coast took steps to resume operations. In all, companies halted 156,907 barrels per day of oil production, according to estimates Tuesday by the U.S. Bureau of Safety and Environmental Enforcement.
Oil also weakened as the United States-China trade dispute raised demand worries. Trump could impose levies on $200 billion more of Chinese imports after a public comment period on the new tariffs ends on Thursday.
Also weighing on prices is Iran’s persistence in finding future markets for its oil come November when US sanctions against Tehran go into full effect. On Wednesday, Tehran reported that Europe was looking to open bank accounts in Europe for Iran to deposit oil revenues and secure Iranian oil exports.
The currency crisis in Turkey, where the Turkish lira has fallen more than 40 percent this year, also strikes a discordant note in the global tune of economic growth.
API DATA
The API weekly data, released a day later due to a public holiday, was bearish compared to market expectations. While crude stocks drew by 1.9 million barrels, the market expected a draw closer to 3 million barrels. The API also reported a build of 613 KB in crude stocks at Cushing.
Gasoline stocks built against expectations of a draw and distillate stocks built a bit more than expected.
Naphtha
Asia’s naphtha crack eased to a one-week low of $97.98 a tonne on Wednesday due to ample supplies.
Naphtha fundamentals in Asia had improved between Aug. 28 and Sept. 4 as demand for spot and term cargoes soaked up some of the supplies. But the market direction changed mid-week as a total of 220 KT of naphtha were being offered to the spot market this week from Kuwait, Abu Dhabi and Egypt.
The September crack is lower at -$ 0.30 /bbl
Gasoline
Asia’s gasoline crack touched a one-week low of $8.13 a barrel on Wednesday on ample stocks.
Cash deals remained active as Emirates National Oil Company (ENOC) continued to scoop up a sizable amount of petrol. ENOC bought six of the seven cargoes traded in the Singapore cash market on Wednesday, bringing its total purchases since Sept. 3 to 1.15 million barrels. This made up some 85 % of total volumes sold this week and the cargoes bought by ENOC so far were sufficient to fill nearly five medium-range size tankers.
Japan’s gasoline stocks in the week to Sept. 1 edged up 80,000 barrels to 9.85 million barrels, official data showed. Current levels were however lower versus a year ago. Gasoline stocks in Fujairah rose 12% to reach 5.9 million barrels. Stocks this week are 4% higher than at the same time last year.
The September crack is lower at $ 9.50 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for gasoil with 10ppm sulphur content edged lower on Wednesday after hitting their highest levels this year a day earlier, but markets remained hopeful about stronger upcoming demand. Cash premiums for 10ppm gasoil were at 54 cents a barrel to Singapore quotes, compared with Tuesday’s 56 cents a barrel.
Meanwhile, cash discounts for jet fuel remained unchanged on Wednesday at 37 cents a barrel to Singapore quotes.
Middle distillate inventories in Fujairah rose 16% to 4.09 million barrels. This is 20% higher than the previous years levels.
The September crack has improved to $ 16.10 / bbl with the 10 ppm crack at $ 16.85 /bbl. The regrade is higher at – $ 0.60 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Fuel oil cash differentials sagged to new multi-month lows on Wednesday as rising arbitrage flows into Singapore in September prompted suppliers to accept lower premiums for cargoes of the fuel in the Singapore trading window.
The 380-cst fuel oil cash premium slipped to $3.77 a tonne to Singapore quotes, its narrowest premium since July 5. Similarly, the 180-cst fuel oil cash premium sank to its lowest since June 7 at $1.74 a tonne to Singapore quotes on Wednesday.
Fuel Oil Stocks in Fujairah rose marginally to 7.5 million barrels. Stocks are currently 30% lower than the previous year’s levels.
The September180 cst crack is lower at -$ 6.10 / 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 once again improved but not for us to take any further action.
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.