Crude Oil

Oil prices continued to stay in a narrow zone as prospects of US – China settlement countered a build in crude inventories. Brent crude settled up 8 cents at $58.32 a barrel. WTI crude settled 4 cents lower at $52.59 / bbl.

Later, prices fell from settlement levels after Chinese officials said Beijing has lowered expectations for progress at the trade talks scheduled for today. U.S.-China trade tensions rose this week as Washington imposed visa restrictions on Chinese officials and placed some Chinese companies on a blacklist.

Turkey launched a military operation against Kurdish fighters in northeast Syria, President Tayyip Erdogan said, adding the offensive was aimed to eliminate a “terror corridor” along the Turkish border. Analysts said the attacks could affect the economy of the oil-producing Kurdistan region in Iraq and boost energy prices. Prices pared gains after U.S. President Donald Trump said the assault on Syria was “a bad idea” not backed by his administration. 

Japan’s core machinery orders slipped for the second consecutive month in Aug’19, falling 2.4% MoM and 14.5% YoY, adding to a batch of gloomy data suggesting businesses and the broader economy are feeling the pain from rising global trade frictions.

DOE data

U.S. crude inventories grew 2.9 million barrels last week, more than double analysts’ expectations for an increase of 1.4 million barrels.

U.S. crude oil production rose last week to a record of 12.6 million barrels per day. Also contributing to the build would be a drop in refining runs to 85.6% as refineries go in for winter turnarounds. However, exports rebounded to a 3.5 month high of 3.4 million bpd. Our material balance statement, in fact, suggests that crude stocks fell marginally. 

The material balance statement also suggests that the gasoline draw has been understated while the distillate draw is perhaps exaggerated.

Having said that, demand for both gasoline and distillate were at a healthy 9.4 mbpd and 4.0 mbpd respectively.


Asia’s naphtha crack surged 13.95% to hit a near one-year high of $77.43 a tonne on Wednesday as persistent demand drove the value up for the second day.

At least four buyers including South Korea’s GS Caltex, SK Energy, KPIC and Chinese Unipec were in the market on Tuesday seeking naphtha for second-half November delivery. GS Caltex paid premiums of about $25 a tonne to Japan quotes on a cost-and-freight basis for heavy full-range grade, reflecting a 25 times increase versus the $1 a tonne premium it paid a year ago.

Market fundamentals made a complete U-turn after the Sept. 14 attacks on Saudi Arabia’s oil facilities. Excess supplies that had plagued the market for months were mopped up.

The October crack is higher at – $ 2.40 / bbl.

The November crack is at – $ 2.35 / bbl.


No fresh news on gasoline markets. Light distillate stocks at Fujairah dropped by 905 KB to 5.68 million barrels in the week ended 7th October.

The October crack is higher at $ 10.25 /bbl

The November crack is at $ 8.20 /bbl

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


Asia’s 10ppm gasoil cash premium to Singapore quotes rose to an almost one-year high of $1 a barrel on Wednesday, on strong demand and tight supplies due to refinery maintenance across regions.

Close to 1 million tonnes of diesel/gasoil from the Middle East and Asia, including India, are expected to arrive in Northwest Europe and the Mediterranean by the end of the week compared to 380,000 tonnes in the previous week.

There are refinery maintenances this month in South Korea, Taiwan, Japan and Vietnam. In Europe, about 1.9 million barrels per day of refining capacity is under maintenance this week for seasonal turnaround, the highest this autumn.

The October crack for 500 ppm Gasoil is higher at $ 17.80 /bbl with the 10 ppm crack at $ 18.80 / bbl. The regrade is at  – $ 0.20 /bbl 

The November crack for 500 ppm Gasoil is at $ 17.70 /bbl with the 10 ppm crack at $ 18.70 / bbl. The regrade is at  + $ 0.50 /bbl 

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

Fuel Oil

 Asia’s high-sulphur fuel oil (HSFO) ended its losing steak on Wednesday with 380-cst HSFO cash premiums and prompt time-spreads climbing higher after nearly two weeks of losses.

Cash premiums of 380-cst HSFO cargoes rose to $19.02 per tonne above Singapore quotes after eight straight sessions of declines, up from a 1-1/2 month low of $16.25 per tonne in the previous session.

Backwardation in the prompt-month Oct/Nov 380-cst time spread also firmed to $24 per tonne on Wednesday, up from a more than one-month low of $17.25 a tonne on Tuesday..

The October 180 cst crack is higher at -$  13.70 / bbl with the visco spread at  $ 0.90 /bbl.

The November 180 cst crack is at -$  14.55 / bbl with the visco spread at  $ 2.70 /bbl.

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

Hedge Recommendations

No fresh action 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.

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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