Oil futures gained on Monday after Saudi crude production unexpectedly fell in July, raising concerns about global oil supplies as the United States prepares to reinstate sanctions against major exporter Iran. Brent crude futures rose 54 cents to settle at $73.75 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 52 cents to settle at $69.01 a barrel.
Saudi Arabia pumped around 10.29 million barrels per day (bpd) of crude in July, down about 200,000 bpd from June. That came despite a pledge by the Saudis and top producer Russia in June to raise output from July, with Saudi Arabia promising a “measurable” supply boost.
Washington is due to reinstate some sanctions against Iran that it suspended after a 2015 deal between world powers and Tehran that sought to curb Iran’s nuclear program. Some of the sanctions resume on Tuesday. The United States also plans to re-introduce sanctions on Iranian oil in November, which could dent the OPEC member’s output.
Asia’s naphtha physical crack edged up 0.56 percent to a two-session high of $115.85 a tonne on Monday with demand seen from Japan but details were sketchy. India has offered over 640,000 tonnes of naphtha for August shipment, making this the highest monthly quantity this year, with unusual offers from Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL) and Reliance Industries.
The balance August crack is lower at $ 0.50 /bbl.
Asia’s gasoline crack inched up 2 cents to a two-session high of $7.48 a barrel but this was in pale comparison versus $12.17 on Aug. 7 last year as ample supplies were weighing on this year’s value despite pockets of demand.
The balance August crack is higher at $ 8.90 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s prompt month time spread climbed to a near one-month high on Monday, supported by firm seasonal demand for aviation fuels and steady regional flows to Europe and the United States. The jet fuel time spread for Aug/Sept rose to 11 cents a barrel on Monday, up from Friday’s near parity of 2 cents a barrel. The prompt month time spread was last higher on July 11 at 16 cents a barrel. Jet margins, or cracks, for September also started the week higher, climbing 27 cents a barrel to a one week high of $14.94 a barrel over Dubai crude. In the physical market, cash premiums for jet fuel cargoes edged one cent per barrel higher on Monday to 11 cents a barrel to Singapore quotes amid a lack of deal activity.
The balance August crack has improved to $ 14.10 / bbl with the 10 ppm crack at $ 15.00 /bbl. The regrade has eased to $ 0.50 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s fuel oil market started the week lower with cash premiums and prompt-month time spread slipping to multi-week lows. However, despite the weaker market on Monday, market fundamentals remained supportive as tight
The 380-cst premiums slipped to a three-week low of $5.94 a tonne to Singapore quotes, while 180-cst premiums were at a one-week low of $5.07 a tonne to Singapore quotes. Similarly, the prompt month 380-cst time spread was at its narrowest premium in almost three weeks at $7.50 a tonne.
The balance August 180 cst crack is weaker at -$ 1.10 / bbl with the visco spread at $ 1.10 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The fuel oil cracks continuing to recede augur well for our hedge positions.
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.