Crude Oil
Middle East tensions kept crude oil futures buoyant in the face of a swathe of dismal economic data. Brent crude futures rose 5 cents to settle at $64.15 a barrel. U.S. WTI crude futures rose 17 cents to settle at $57.83 a barrel. .
The European Union on Tuesday urged Iran to reverse its scaled up uranium enrichment that breaches a nuclear deal it agreed in 2015 with world powers.
US and China are set to relaunch trade talks this week. Chinese Vice Premier Liu He conducted a phone call with US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin, China’s Ministry of Commerce said in a statement Wednesday. The two sides are talking about having a face-to-face meeting. There are, however, few signs their differences have narrowed.
In its monthly forecast on Tuesday, the U.S. Energy Information Administration (EIA) cut its 2019 world oil demand growth forecast by 150,000 barrels per day to 1.07 million bpd. It attributed the revision to lower-than-expected global fuel consumption and weakening economic growth, citing “increasing uncertainty” and “increasingly weak global economic signals.”
Major US oil producers began evacuating and shutting in production on Tuesday at their deepwater Gulf of Mexico platforms in advance of a tropical disturbance expected to become a storm this week. The Gulf of Mexico is home to 17 percent of US crude oil output and 5 percent of natural gas output daily.
Philadelphia Energy Solutions has extended to August 25 the shutdown date of the refinery from July 1 previously as it works to secure and repair the plant
API data
The API reported a third consecutive large crude draw this week. Gasoline, however drew marginally while distillates showed a healthy build. As usual, the market will wait for corroboration from the official DOE data.
Naphtha
Asia’s naphtha crack edged down from a 7-1/2 week high to a two-session low of $35.20 a tonne on Tuesday.
Lotte Chemical paid a premium of about 50 cents to Japan quotes on a cost-and-freight (C&F) basis for the petrochemical feedstock scheduled for second-half August delivery. Although this was sharply lower than the premiums of $5 Lotte Chemical had paid in April, the prices were in stark contrast to the discounts YNCC had paid a week ago. Higher spot prices were a key reason behind LG Chem having cancelled a tender to buy naphtha last Friday.
The July crack is stronger at -$ 5.35 /bbl
Gasoline
Asia’s gasoline crack fell for the first time in nearly 1-1/2 weeks to a four-session low of $6.31 a barrel, under pressure from firmer oil prices.
Despite the fall, the current gasoline crack is at least 100% higher versus a year ago as production cuts and maintenance helped to boost margins. New refining capacity is expected to come onstream, including China’s Hengli 400,000 barrels per day refinery which reached full capacity in May.
The July crack is higher at $ 7.35 / 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 25 cents a barrel to Singapore quotes on Tuesday, compared with a discount of 17 cents per barrel a day earlier.
China issued a second batch of refined fuel export quotas for 2019 in May that was 30 percent higher than the first batch.
Cash premiums for jet fuel dipped by two cents to 17 cents a barrel to Singapore quotes on Tuesday.
The July crack for 500 ppm Gasoil is higher at $ 13.95 /bbl with the 10 ppm crack at $ 14.65 / 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 Tuesday hitting a fresh record high as concerns of tight high-sulphur fuel oil (HSFO) supplies continue to boost prices in the Singapore pricing and fuel oil storage and trading hub.
In four of the five trading sessions last week, the front-month time spread hit four record highs before settling at an all time high of $24.25 per tonne on Friday.
The July180 cst crack is higher at + $ 4.05 / bbl with the visco spread at $ 0.60 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh for today.
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.