Oil prices edged lower on Tuesday after U.S. President Donald Trump fired national security adviser John Bolton. Brent crude futures settled 21 cents lower at $ 62.38 /bbl. WTI crude futures settled 45 cents lower at $57.40 /bbl.
Trump abruptly fired Bolton amid disagreements over how to handle foreign policy challenges such as North Korea, Iran, Afghanistan and Russia. The exit of Bolton, who took a strident stance against Iran, raised speculation of a return of Iranian crude exports to the market.
The market was further pressured by the EIA lowering its spot crude oil price forecasts for spot WTI for 2019 to an average of $56.31 per barrel from $57.87 in its August report. The EIA also reduced its forecast for spot Brent prices for 2019 to an average of $63.39 per barrel from $65.15.
US crude oil production is expected to rise by 1.25 mb/d in 2019 to a record of 12.24 mb/d, the US EIA said on Tuesday, slightly lower than its previous forecast for a rise of 1.28 mb/d. The output in 2020 is forecast to rise by 990 kb/d to 13.23 mb/d.
US job openings fell for a second straight month in Jul’19 by 31,000 to a seasonally adjusted 7.2 million according to the Labor Department amid decreases in wholesale trade and the federal government, bolstering economists’ views that job growth has peaked
The large crude draw took the market by surprise. We admit to being surprised ourselves as our estimate for this week was a small build. The draw was possibly playing catch up with the DOE given that the API had reported a small build last week while the DOE had reported a draw.
However, our material balance statement for the previous week showed that crude stocks should perhaps have built, and significantly at that. We reproduce it below for ready reference.
Official figures will be released on Wednesday.
Asia’s naphtha crack slipped by about 3.8%, or 95 cents, to a two-session low of $24.10 a tonne on Tuesday due to higher oil prices.
Fundamentals have been persistently weak due to slow demand for a number of reasons including recent cracker outages in South Korea, cracker maintenance and volatility in oil prices.
But supplies were seen lower recently and that could help ease the oversupply situation. Middle Eastern supplies in September, at 2.2-2.3 million tonnes, are down by about 25% versus August, data from Refinitiv Oil Research showed.
The September crack is higher at – $ 6.05 / bbl.
The October crack is at – $ 5.20 / bbl.
No fresh news on the gasoline markets.
The September crack is higher at $ 7.65 /bbl
The October crack is at $ 6.60 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for 10 ppm gasoil were at a premium of 3 cents a barrel to Singapore quotes on Tuesday, the lowest since Aug. 8. They were at a 5-cent premium on Monday. The premiums for the benchmark gasoil grade have dropped about 93% from a recent peak of 44 cents a barrel on Aug. 20.
Cash premiums for jet fuel continued their uptrend and rose to 34 cents a barrel to Singapore quotes on Tuesday, levels not seen since July 31. The premiums were at 28 cents a barrel to Singapore quotes on Monday.
The September crack for 500 ppm Gasoil is higher at $ 16.65 /bbl with the 10 ppm crack at $ 17.50 / bbl. The regrade is at + $ 0.40 /bbl
The October crack for 500 ppm Gasoil is at $ 17.65 /bbl with the 10 ppm crack at $ 18.35 / bbl. The regrade is at + $ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s cash premium for 380-cst high-sulphur fuel oil hit a fresh record high on Tuesday, buoyed by scarce supplies ahead of a switch to cleaner marine fuels from early next year.
The cash premium for the mainstay 380-cst HSFO jumped to $41.78 per tonne above Singapore quotes on Tuesday, from the previous high of $41.01 per tonne hit last Wednesday. The September/October time-spread for 380-cst HSFO widened its backwardated structure to trade at about $48.50 a tonne on Tuesday, according to Refinitiv data. The October/November spread was at $41 per tonne on Tuesday.
The 380-cst barge crack to Brent crude inched up to minus $21.46 a barrel on Tuesday from minus $21.95 on Monday.
The September 180 cst crack is lower at – 4.65 / bbl with the visco spread at $ 0.65 /bbl.
The October 180 cst crack is at – 10.40 / bbl with the visco spread at $ 0.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Distillate cracks continue to rise, arguably in anticipation of the impact of IMO 2020. However, prudence dictates that we should hedge ourselves against risks that cracks cannot sustain at these levels, basis historical data. Accordingly, we shall hedge Cal20 Jet-Dubai above $ 19.00 / bbl, Q4 10ppm Gasoil Dubai above $ 19.00 /bbl and Cal 20 10 ppm Gasoil Dubai above $ 19.60 /bbl and $ 20.00 / bbl.
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.