Crude Oil

Oil prices rose on Friday, driven up as Venezuela struggles to meet its supply obligations. Brent crude  futures jumped $ 1.96 to settle at $77.32 /bbl. WTI futures rose $ 1.22 cents to settle at $ 65.95 /bbl

The rise in Brent prices is probably exacerbated due to buying of the Brent WTI spread.

For now both Venezuela and Iran are appealing to OPEC to protest against the sanctions. If OPEC lends a sympathetic ear to them, this could cause further turmoil in an already agitated market.


Asia’s naphtha crack fell for the third straight session to hover around a 1-1/2 month low of $82.05 a tonne. Demand for cargoes through tenders appeared muted. 

The balance June crack is at -$ 2.65 / bbl


Asia’s gasoline crack fell to a one-month low of $6.39 a barrel, pulled down by abundant supplies. Crack value has been trapped in a losing streak since May 23, despite it being a peak season as the Muslim fasting month usually drives up demand. 

Singapore Light Distillate inventories fell 532,000 barrels to 14.00 million barrels. This is 11% higher than last year. Inventories in ARA rose by 45 KT to 1.05 million tons.

The balance June crack has dropped to $ 8.35 / bbl.

Click Here for a graphical depiction of Global Gasoline stocks by region.


 Asia’s refining margins for 10ppm gasoil dropped to their lowest in three months on Thursday, while cash premiums edged slightly higher but remained around the weakest level in nearly two months. Refining margins for gasoil with 10 ppm sulphur content were around $14.50 a barrel over Dubai crude during Asian trading hours -levels not seen since early March this year.

Cash differentials for 10ppm gasoil  were at 23 cents a barrel to Singapore quotes, up from 21 cents on Wednesday. The cash premiums have fallen more than 50 percent over the last two weeks on concerns that demand is not very strong amid limited scope for arbitrage, and inventories would start building as the refinery turnaround season draws to an end. Demand from India will be one of the major drivers for gasoil this year and a dip in Indian diesel sales may have wider effects on Asian markets.

Meanwhile, cash differentials for jet fuel  narrowed their discounts on Thursday, and stood at 11 cents a barrel to Singapore quotes, compared with a discount of 13 cents a barrel on Wednesday. 

Singapore Middle Distillate inventories rose about 7 percent in the week to June 6 to 7.7 million barrels.  Stocks in ARA, however, fell by 16 KT to 2.07 million tons.

The balance June crack is steady at $ 13.25 / bbl with the 10 ppm crack at $ 14.10 /bbl. The regrade is at $ 0.20 /bbl

Click Here for a graphical depiction of Global Distillate stocks by region.

Fuel Oil

Cash premiums of Asia’s 180-cst and 380-cst fuel oil grades continued to narrow amid lower deal values and lower supplier offers for cargoes of the fuel in the Singapore trading window on Thursday. Cash premiums for both fuel oil grades have trended lower this week despite expectations of tight supplies of finished grade bunker fuels in Singapore in June and July amid a lack of arbitrage supplies and a shortages of cutter and blend stocks.

Cash premiums of 380-cst fuel oil fell for a fifth straight session to $1.87 a tonne to Singapore quotes.  The 180-cst premium fell for a fourth consecutive session to a two-week low of $1.72 a tonne to Singapore quotes.  In the previous week, strong buying interest for spot cargoes boosted cash premiums of both fuel oil grades to more than eight-month highs.

Singapore Fuel Oil inventories  fell by 1.5 million barrels to 19.54 million barrels.  Stocks in ARA, however, rose by 34 KT to 1.14 million tons. 

The balance June 180 cst crack crashed to -$ 3.45 / bbl. The visco spread has narrowed to $ 1.45 /bbl. 

Click Here for a graphical depiction of Fuel Oil stocks by region.

Hedge Recommendations

Our fuel oil hedges have now come back into the money. In fact there may well be a small sense of regret of not having hedged more. These pressures are often telling on a risk management desk. For today, we would recommend the purchase of the Jap- Naphtha-Dubai crack for 3Q19 at a value of -$2.2 /bbl

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.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

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