Crude Oil
Oil futures rose on Friday as the news of Britain seizing an Iranian tanker escalated tension. Brent crude futures rose 93 cents to settle at $64.22 a barrel. WTI crude futures settled at $ 57.51 a barrel, up 17 cents.
Both benchmarks were down for the week as concerns about a slowing global economy outweighed risks to supply. Brent recorded a 3.3% weekly loss and WTI shed roughly 1.8%.
The U.S.-China trade war has dampened prospects of global economic growth and oil demand, but talks resume next week in a bid to resolve the deadlock. German industrial orders fell far more than expected in May, and the Economy Ministry said this sector of Europe’s largest economy was likely to remain weak in coming months.
The U.S. Labor Department said non-farm employers added 224,000 jobs last month, the most in five months. However, new orders for U.S. factory goods fell for a second straight month in May, stoking economic concerns.
Iran threatened to capture a British ship after British forces seized an Iranian tanker in Gibraltar over accusations the ship was violating EU sanctions on Syria.
Naphtha
Asia’s naphtha crack fell 4.9% on Friday to $34.18 a tonne but remained near a seven-week high from the previous session.
Demand for naphtha has been brisk this week where buyers including Chinese CNOOC and South Korean SK Energy, Hanwha Total and YNCC had bought cargoes for August delivery. But LG Chem cancelled a tender to buy open-specification naphtha on Friday. It was unclear if LG Chem would return to the market next week or buy the cargo privately but YNCC had paid a discount of $2 a tonne to Japan quotes on a cost-and-freight (C&F) basis for similar grade naphtha the previous day.
The July crack is weaker at -$ 5.15 /bbl
Gasoline
Asia’s gasoline margins stayed at a two-month high of $6.49 a barrel on stock draw down across key regions.
Gasoline stocks in ARA fell by 116 KT to 1.12 million tonnes.
The July crack is lower at $ 7.85 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10ppm sulphur content were at a discount of 20 cents a barrel to Singapore quotes, compared with a discount of 19 cents per barrel on Thursday.
Gasoil stocks in ARA rose by 173 KT to 2.93 million tonnes.
Cash premiums for the aviation fuel were at 22 cents a barrel premium to Singapore quotes on Friday, compared with a 21-cent premium a day earlier.
The jet cash differentials have got a boost this week, thanks to active demand for physical cargoes in the Singapore trading window and as the ongoing summer travelling season brought additional support to the region’s robust aviation market. Asia-Pacific airlines posted a rise of 4% in May passenger demand, compared with the same month in 2018 and up from 2.9% growth in April, the International Air Transport Association (IATA) said on Thursday.
The July crack for 500 ppm Gasoil is lower at $ 13.85 /bbl with the 10 ppm crack at $ 14.55 / bbl. The regrade is at +$ 0.45 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month time spread extended gains on Friday, while marking a record high in four sessions this week, as near-term sentiment continues to be buoyed by bullish fundamentals and limited supplies.
The front-month Aug/Sept 380-cst time-spread widened its backwardated structure to a record $24.25 per tonne, up from the previous record of $20.50 per tonne hit on Thursday.
Fuel oil premiums in Asia surged to record highs this week in one of the first signs of the impact of a shift in global ship fuel rules set to occur in 2020.
Companies reducing their holdings of high-sulphur fuel oil (HSFO) before lower sulphur mandates for ship fuel go into effect next year has caused a recent drop in HSFO inventories in Singapore, the world’s biggest bunker fuel port.
At the same time, HSFO demand in the Middle East has soared to fuel power plants meeting increased cooling demand in the region.
Fuel Oil stocks in ARA fell by 23 KT to 1.21 million tonnes.
The July180 cst crack is stronger at + $ 3.80 / bbl with the visco spread at $ 0.75 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh for today.
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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.