Crude Oil
Oil rose on Tuesday, supported by a larger-than expected U.S. stock draw and supply concerns in Norway and Libya, though gains were tempered by the United States’ indication that it would consider requests for waivers from Iranian oil sanctions. Brent crude futures gained 79 cents to settle at $78.86 per barrel. Earlier, the global benchmark hit a session high of $79.51. U.S. crude futures rose 26 cents to settle at $74.11, after hitting a high of $74.70.
Both crude benchmarks retreated from near four-year highs after U.S. Secretary of State Mike Pompeo said the United States would consider requests from some countries to be exempted from sanctions on Iranian oil. Also, Suncor Energy said its 360,000-barrel-per-day Syncrude facility would resume some production in July, earlier than expected.
The EIA raised its 2019 US output forecast to 11.8 mb/d (prior 11.76 mb/d) in its June Short-Term Energy Outlook. This means that the US is set to become the world’s top oil producer in 2019. EIA also kept 2018 output forecast unchanged at 10.79 mb/d
Still, Brent was buoyed by a strike by hundreds of workers on Norwegian offshore oil and gas rigs, leading to the shutdown of one Shell-operated oilfield.
Also, according to Qasioun news, Islamist militants (ISIS) captured the Sayyad and Dahash oil fields in Syria.
The markets this morning have given maximum weightage to Pompeo’s statement and prices are down around 75 cents from yesterday’s settle at the time of writing.
API Data
U.S. crude inventories fell which 6.8 million barrels, which was significantly higher than expectations. While gasoline too drew more than expected, distillates built more than expected.
Naphtha
Asia’s naphtha crack edged up 1.8 percent to stay at a five-week high of $90.15 a tonne on Tuesday, supported by demand. Taiwan’s Formosa bought additional naphtha for August delivery at premiums of about $4.50 a tonne to its own price formula on a cost-and-freight (C&F) basis.
The July crack is steady at -$ 1.00 / bbl. The August crack is at -$ 0.85 /bbl
Gasoline
Asia’s gasoline crack rose to hit a three-week high of $5.07 a barrel after languishing at two-year low levels recently. Market watchers had previously expected the crack value to see an upward correction as overall demand growth in Asia lags supply growth.
The July crack has further improved to $ 8.20 / bbl. The August crack is at $ 8.80 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for jet fuel climbed to their highest in more than five weeks on Tuesday, while refining margins for the aviation fuel edged lower as crude prices gained.
Cash differentials for jet fuel, which flipped into premiums on Monday for the first time in more than a month, were at a premium of 12 cents a barrel to Singapore quotes, compared with an 11-cents premium a day earlier.
Meanwhile, cash differentials for gasoil with 10ppm sulphur content were at a discount of 18 cents a barrel to Singapore quotes, compared with a discount of 14 cents on Monday.
The July crack is higher at $ 13.50 / bbl with the 10 ppm crack at $ 14.45 /bbl. The regrade is higher at $ 1.60 /bbl.
The August crack is at $ 13.60 / bbl with the 10 ppm crack at $ 14.50 /bbl. The regrade is at $ 1.30 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s fuel oil crack slipped for a second straight session on Tuesday, pulled down by higher crude oil prices. The August 180-cst fuel oil crack to Brent crude was trading at a discount of about $5.69 a barrel on Tuesday, down from minus $5.10 a barrel on Monday.
Despite the widening fuel oil crack this week, fuel oil refining margins were relatively strong given the rise in crude oil prices. Since May, the fuel oil market sentiment has been boosted by tight supplies of finished grade fuel oil, lower arbitrage arrivals into Asia as well as firm demand for the fuel from the power generation and shipping sectors.
The July crack is steady at -$ 1.95/ bbl with the visco spread down to $ 1.00 /bbl
The August crack is at -$ 2.35/ bbl with the visco spread at $ 1.20 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Due to reasons beyond our control, we are unable to update this section.
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.
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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.