Oil prices dropped more than $1 a barrel on Wednesday after a much larger-than-expected build in U.S. crude inventories. Brent crude futures fell $ 1.22 to settle at $61.74 a barrel. WTI crude futures ended 88 cents lower at $56.35 a barrel.
Also bearing down on prices were reports that the signing of a U.S.-China trade deal could be delayed until December.
Adding to pressures, the International Monetary Fund said euro zone economic growth was set to slow more than expected as the bloc’s manufacturing crisis could spill over to the larger services sector under global trade tensions. Data showed Germany’s services sector barely grew in October, while euro zone business activity expanded slightly faster than expected but remained close to stagnation.
The Energy Information Administration (EIA) showed U.S. crude inventories rose by 7.9 million barrels in latest week, exceeding analysts’ expectations for a build of 1.5 million barrels. The build was exacerbated by a drop in crude exports and an increase in imports last week.
Gasoline stocks dropped by 2.8 million barrels, compared with a forecast of a 1.8 million-barrel drop. The draw seems to have been essentially caused by an increase in exports as the drop in production and imports were offset by a huge fall in demand.
Distillates, which include diesel and heating oil, lost 622,000 barrels, versus expectations for a decline of 949,000s, the EIA said. As per our material balance report, distillate stocks are virtually flat for the previous week.
Asia’s naphtha crack slumped nearly 14% to an almost one-month low of $69.68 a tonne on Wednesday due to muted demand.
The recent run up in spot premiums have hurt petrochemical margins according to buyers who have been shelling out premiums in levels not seen since 2013 for naphtha recently due to tight supplies. Prices of petrochemical products were, however, not catching up, they added.
It was, however, not immediately clear if any petrochemical makers have cut cracker runs.
The November crack is lower at – $ 3.50 / bbl.
Asia’s gasoline crack jumped 13.85% to a two-and-half week high of $7.89 a barrel to mirror the strength in the United States. Traders said an unusually high volume of gasoline was being exported from Europe to the U.S West Coast, where a string of refinery outages led to higher demand for the motor fuel.
Light distillate stocks in Fujairah also dropped by 109 kb to 5.92 million barrels.
The November crack is higher at $ 7.40 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for jet fuel weakened on Wednesday to their widest discounts in nearly five months, weighed down by ample supplies and lacklustre demand.
Cash discounts for jet fuel widened to 30 cents per barrel to Singapore quotes, the biggest discounts since June 11. They were at a discount of 13 cents per barrel a day earlier.
The physical market for jet fuel in the Singapore trading window has remained pretty quiet with only four deals over the past couple of weeks, and no bids on most of the days. The prompt-month time spread for the aviation fuel , which flipped into a narrow contango on Tuesday, widened to trade at a discount of 11 cents a barrel on Wednesday.
The jet fuel market in Asia has adequate supplies as the aviation sector grapples with slowing economic activity, while ongoing U.S.-China trade tensions have dampened air freight demand. Meanwhile, the existing supply glut would likely increase further in the short term as some regional refineries, undergoing planned turnarounds, return to the market this month.
Middle distillate inventories in Fujairah jumped by 1.07 million barrels to 3.09 million barrels in the week ended 5th November.
The November crack for 500 ppm Gasoil is lower at $ 14.70 /bbl with the 10 ppm crack at $ 15.70 / bbl. The regrade is at $ 0.35 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s prompt-month 380-cst high-sulphur fuel oil (HSFO) slipped to a one-week low on Wednesday, weighed down by eroding demand for high-sulphur marine fuels.
Meanwhile, residual fuel oil inventories in Fujairah slipped 1.5% in the week to Nov. 4, falling away from a record high of 14.55 million barrels in the previous week to 14.33 million barrels, official data showed.
Stockpiles of VLSFO in the Fujairah bunkering and trading hub have steadily increased in recent months, mostly shipped in from Europe and Singapore, ahead of the global sulphur cap on marine fuels starting January 2020.
The November 180 cst crack is lower at -$ 18.75 / bbl with the visco spread at $ 0.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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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.