Oil prices continued to retrace on Friday after hitting a 4 year high of $86.74 on Wednesday. Brent crude fell 42 cents to settle at $84.16 a barrel. WTI crude futures was almost unchanged at $74.34 a barrel, up one cent.
WTI’s weekly gain was about 1.3 percent while Brent’s was around 1.4 percent. Price gains this week were limited by Saudi Arabia and Russia’s saying they would raise output to at least partly make up for expected disruptions from Iran.
India will buy 9 million barrels of Iranian oil in November, indicating that the world’s third-biggest oil importer will keep purchasing crude from the Islamic republic.
S&P Global Platts sees prices strengthening “a little” toward the end of the year. Fundamentals indicate a price in the high $70s for Brent, but the reality is seen above that. Prices are then likely to weaken in the first two quarters of 2019 before strengthening about $4 to $5 a barrel in the second half of the year as the market anticipates a shipping fuel regulation that takes effect in 2020.
U.S. drillers cut two oil rigs in the week to Oct. 5. Rising costs and pipeline bottlenecks in the nation’s largest oil field have hindered new drilling since June. Hedge funds cut their combined futures and options position in New York and London by 13,459 contracts to 333,109 in the week to Oct. 2.
Due to unavoidable circumstances, we are not publishing a technical analysis section this Monday.
Asia’s naphtha crack recovered from a three-week low on Friday and closed at a two-session high of $93.65 a tonne, due to easing high oil prices.
While spot naphtha prices were seen recovering slightly as supplies eased due to lower incoming cargoes from Europe, Kuwait sealed its 12-month deal starting December at a sharply higher premium versus a year ago. Plastics and other petrochemical products will drive global oil demand to 2050, offsetting slower consumption of motor fuel, the International Energy Agency (IEA) said on Friday.
The October crack is higher at -$ 2.15 /bbl
Asia’s gasoline crack recovered from a 2-1/2-month low to reach a two-session high of $6.22 a barrel.
However, high supplies remained a concern.
Gasoline stocks in ARA rose 10.79 percent in the week to Thursday to a near four-month high of 1.088 million tonnes. High stocks in Europe is being caused by poor demand for European gasoline in the United States. Recent firm prices in Asia had resulted in at least 250,000 tonnes of gasoline provisionally booked for Singapore arrival next month.
The October crack is still at $ 7.00 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10ppm gasoil fell to 45 cents a barrel to Singapore quotes on Friday, compared with a premium of 54 cents a barrel a day earlier.
Cash discounts for jet fuel narrowed to a discount of 42 cents a barrel to Singapore quotes, compared with a discount of 62 cents a barrel on Thursday. This is the lowest discount in over a week. Sentiment is buoyed by the prospect of winter demand for both Jet fuel and kerosene for heating.
Gasoil stocks independently held in ARA rose 0.8 percent in the week to Thursday, data from Dutch consultancy PJK International. Gasoil inventories for the week to Oct. 4 were at about 2.93 million tonnes, the highest since March this year. Stocks of gasoil, which is currently very expensive, were up slightly as more imports came into the ARA region and demand up the Rhine slowed compared with last week, despite some exports to Britain and the Mediterranean.
Jet fuel inventories fell 1.6 percent to 672,000 tonnes.
Compared with year-ago levels jet fuel stocks were unchanged, while gasoil inventories were about 15 percent higher.
The October crack has dropped to $ 15.25 /bbl with the 10 ppm crack at $ 16.05 /bbl. The regrade is higher at -$ 0.60 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Undeterred by rising crude prices, the November 380-cst barge fuel oil crack on Friday extended gains for a fourth straight session as concerns of tightening supplies from looming U.S. sanctions on Iranian oil exports from next month continued to boost sentiment.
The November 380-cst barge crack was trading at about minus $10.75 a barrel to Brent crude during Asia trade, up from Thursday’s close at minus $10.86 a barrel.
Meanwhile, fuel oil inventories in the ARA region fell this week following increased shipments of the fuel to Singapore, where weekly fuel oil inventories held steady, the latest data showed. Weekly fuel oil stocks in the ARA oil and storage hub slipped by 125 KT to a total of 1.247 million tonnes in the week ended Oct. 4.ARA fuel oil stocks fell as two VLCCs left Rotterdam for Singapore with incoming Aframaxes unable to balance the exports. ARA fuel oil inventories were 10 percent lower from year-ago levels but above the five-year average of 1.039 million tonnes for this time of the year..
The October 180 cst crack is stronger at -$ 2.80 / bbl with the visco spread at $ 0.80 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Cal 19 distillate cracks have receded.Fuel oil cracks in November and December are now very strong and we will recommend hedging at current levels of -$ 2.80 and -$ 2.95 / bbl respectively.
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.