Oil prices rose about one percent on Tuesday on partial production shutdown in the Gulf of Mexico because of Hurricane Michael. Brent crude settled rose $ 1.09 at $85.00 a barrel. WTI crude futures gained 67 cents to settle at $74.96 a barrel.
Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries, last week said it would increase crude output next month to 10.7 million bpd, a record. Iranian Oil Minister Bijan Zanganeh on Monday described a Saudi claim that the kingdom could replace Iran’s crude exports as “nonsense.”
ENI said Europe refiners are cautious on US crude quality issues, as iron content of US crude can be quite high and volatile. This could impact US exports and therefore prop up US stocks.
Meanwhile, producers in the U.S. Gulf of Mexico on Tuesday cut oil production by about 40 percent as Hurricane Michael approached the Florida coast, the Bureau of Safety and Environmental Enforcement (BSEE) said, citing reports from 27 companies.
The International Monetary Fund on Tuesday cut its global economic growth forecasts for 2018 and 2019, saying trade tensions and rising import tariffs were taking a toll on commerce while emerging markets struggle with tighter financial conditions and capital outflows.
Asian naphtha inter-month spread for the front month slipped into contango for the first time since September as supplies were expected to build after easing briefly.
Asia’s naphtha crack also came under pressure from not just high supplies but firmer oil prices as well to hit more than a three-month low of $87.78 a tonne.
Earlier expectations of demand being able to soak up most of the surplus supply in November may not materialise.
The balance October crack has collapsed to -$ 3.35 /bbl.
The November crack is at – $ 2.50 / bbl
The Gasoline crack versus Brent settled at $ 6.10 /bbl today. While supplies in Singapore have been dwindling, stocks in the US are at a seasonal high.
The balance October crack is higher at $ 7.25 / bbl.
The November crack is at $ 7.10 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10ppm gasoil climbed to 65 cents a barrel to Singapore quotes, up from 54 cents the previous day. Lower supply from Japan and a few other places in North Asia is also helping tighten the gasoil market fundamentals.
Cash discounts for jet fuel narrowed to 17 cents a barrel to Singapore quotes on Tuesday, the lowest since Sept. 24. Jet cash discounts were at 21 cents a barrel on Monday.
The October crack has improved to $ 15.90 /bbl with the 10 ppm crack at $ 16.70 /bbl. The regrade is lower at -$ 0.80 /bbl.
The November crack is at $ 15.60 /bbl with the 10 ppm crack at $ 16.40 /bbl. The regrade is higher at $ 0.30 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
The front-month East-West (EW) arbitrage climbed to its widest in at least three years on Tuesday as near-term supply constraints and firm demand in Singapore forced the spread higher. A total of 3-3.5 million tonnes of Western fuel oil supplies are expected to arrive in Singapore in October, down from about 3.5-4 million tonnes in September.
While the widening arbitrage spread could boost Western arrivals in November, the gains could be capped by higher freight rates. The 380-cst East-West arbitrage spread for November climbed to $28.75 a tonne, its highest since records began in late-2015.
The October 180 cst crack has eased to -$ 2.05 / bbl with the visco spread at $ 0.80 /bbl
The November 180 cst crack has eased to -$ 2.05 / bbl with the visco spread at $ 1.10 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
The Naphtha-Dubai crack for November is at -$ 2.5 /bbl. There is a strong case for consumers to buy this crack. We would however wait for a day before putting this hedge in place as we would like to see the impact of momentum.
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.