Oil prices continued to rise yesterday on anticipation that US stocks would fall in the wake of the shut down of facilities due to tropical storm Nate. Brent settled 33 cents higher at $56.94 /bbl. WTI rose 38 cents to settle at $ 51.30 /bbl.
After trading in negative territory for most of the day, crude prices rose in the last couple of hours of trading. The only explanation for this rise seems to be unwillingness to be caught short post the data. However, those fears proved to be unfounded and this morning we are seeing both Brent and WTI trade around 35 cents lower at the time writing this post.
The API reported a rise in crude stocks of 3.1 million barrels, a draw in gasoline stocks of 1.58 million barrels and a build in distillate stocks of 2.03 million barrels. This data is expected to be received as bearish by a market which expected draws across the board. The gasoline draw will not be that worrisome as we are almost at the end of summer, but the build in both crude and distillates should put a damper of crude prices basis US demand.
Physical naphtha continues to show immense strength. Yesterday’s crack settle was reported at $ 101.20 / MT, the highest this week. Front month cash premiums also have risen to as high as $ 4.75 / MT, a dollar higher than previously. Demand is expected to stay strong with a few crackers returning on stream after scheduled maintenance.
The paper crack is stable at $ 3.00 /bbl
Gasoline cracks have eased as the reduction in U.S. inventories failed to garner a positive response. However some fresh spot demand from the Middle East in addition to existing demand from Latin America and West Africa may help to support cracks.
The October 92 Ron crack is valued lower at $ 11.55 /bbl.
Distillate cracks have also eased today even though the physical market is witnessing strong demand. Among the buyers looking for cargoes are Vietnam’s PV Oil which is seeking 124,000 MT of 500 ppm sulphur gasoil for October to December delivery, Pakistan State Oil which is seeking ATF for December delivery and Emirates General Petroleum Corp which is seeking 50,000 MT of ATF for November delivery.
The October crack is lower today at $13.10 /bbl. The regrade is valued at -$ 0.40 /bbl.
Limited bookings of cargoes for movement from West to East Asia for the months of November and December and falling inventories have helped prop up the fuel oil cracks. In the week to October 9, Fujairah Oil Industry Zone (FOIZ) fuel oil inventories fell about 117,000 MT to 1.27 million MT. Consequently, the fuel oil inventories are now at their lowest since February 20, and are at their third lowest level since recording began in January this year.
In other news, bunker fuel sellers in India have got some marginal relief with the Government reducing the goods and service tax (GST) on marine fuels (bunker fuel), to 5 % for all vessels. While this will help the Indian bunker players to compete with other lower-tax ports in Asia, they will continue to struggle against Asian bunkering hubs in Singapore, Fujairah and Sri Lanka which levy no taxes on bunker fuel.
The October 180 cSt crack is valued higher at -$2.35 / bbl. The visco spread is valued at $ 0.60 /bbl.
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