Crude Oil
Oil prices rose more than 2 percent on Tuesday after U.S. crude oil production in 2019 was forecast to grow at a slower rate than previously expected, prompting supply concerns. Brent crude oil rose $1.69 to settle at $79.06 a barrel. WTI crude futures settled $ 1.71 higher at $69.25 a barrel.
Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line. But the U.S. government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth.
Workers are planning another round of strikes at Total’s North Sea platforms for 12 hours next Monday, unless there is a breakthrough in talks this week. The Unite labor union said they rejected a revised pay offer from Total in a ballot and therefore have scheduled 3 other rounds of strikes in October as well. The platforms produce around 70kbd in aggregate.
Saudi Arabia says it plans to boost Red Sea export capacity via the rehabilitation of the Al-Muajjiz terminal, which is set to start operations in 4Q-2018. The terminal is slated to supply heavy crude to Red Sea refineries, freeing the Yanbu terminal to export Arab Light.
API Data
The API reported a huge draw in crude stocks last night in its weekly report that has sent prices soaring. We would like to also point out to the huge build in products which seems to suggest that demand is stagnant and refineries are overproducing at this point in time. As usual, we shall wait for the DOE to corroborate this data.
Naphtha
Asia’s naphtha crack hit a three-month low of $91.32 a tonne on Tuesday as supplies were seen outpacing demand. Middle Eastern exports to Asia for September arrival, at 3.2 million barrels, were sharply higher than August volumes of 2.3-2.4 million tonnes. Western cargoes are now expected to cross 1.6-1.7 million tonnes, up from 1.5 million tonnes expected earlier.
The balance September crack is lower at -$ 1.25 /bbl. The October crack is at -$ 0.50 /bbl
Gasoline
Asia’s gasoline crack was at a four-session low of $8.16 a barrel, weighed down by high supplies in Europe and the United States.
The balance September crack has improved to $ 9.55 /bbl. The October crack is at $ 8.85 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for 10ppm gasoil rose on Tuesday to the highest level this year as the prompt-month time spread remained in strong backwardation, but refining margins for the industrial fuel eased amid higher crude prices. Cash differentials for gasoil with 10ppm sulphur content rose to 61 cents a barrel to Singapore quotes, against 57 cents on Monday.
Cash differentials for jet fuel widened their discounts to 35 cents a barrel to Singapore quotes on Tuesday, compared with a discount of 30 cents a day earlier.
The balance September crack has dropped to $ 15.20 / bbl with the 10 ppm crack at $ 15.95 /bbl. The regrade is lower at – $ 0.65 /bbl.
The October crack is at $ 15.10 / bbl with the 10 ppm crack at $ 15.90 /bbl. The regrade is at $ 0.40 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Despite rising crude prices on Tuesday, the front-month 380-cst barge crack discount to Brent crude was slightly narrower, moving further away from a near four-month low seen in the week before. The October 380-cst barge crack to Brent crude was trading at about minus $11.30 a barrel on Tuesday, up from about minus $11.40 a barrel in the previous session.
Higher arbitrage supplies into Asia have weighed on market sentiment since around mid-August, but steady demand and lower regional output due to refinery maintenance is expected to limit further losses.
The balance September180 cst crack is lower at -$ 5.10 / bbl with the visco spread at $ 0.80 /bbl.
The October 180 cst crack is at -$ 4.80 / bbl with the visco spread at $ 1.10 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to report 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.