Crude Oil
After Wednesday’s tumble, prices recovered considerably over the the couple of days as Saudi Arabia was rumored to have said it is considering reducing its output to 7 million mbpd. Brent crude futures settled at $ 58.57 /bbl, 4 cents higher than Friday’s close. WTI crude futures settled at $54.93 a barrel up 43 cents from Friday.
Oil Minister Khaled al-Fadhel said, adding that Kuwait has cut its own output by more than required by the accord. He said fears of a global economic downturn were “exaggerated,” and said global demand for crude should pick up in the second half, helping reduce the surplus in oil inventories gradually.
Saudi Aramco is ready to launch what could be the world’s largest initial public offering. The Saudi government will decide when the IPO will take place based on its perception of what would be the optimum market condition.
Saudi Aramco has signed a letter of intent with India’s Reliance to potentially buy a stake in its refining and petrochemicals business. More reductions were needed to support prices as forecasters and government agencies issue gloomy predictions for the global economy and oil demand growth. The economic outlook has deteriorated worldwide as the trade dispute between the United States and China escalates. Mounting signs of an economic slowdown had caused global oil demand to grow at its slowest pace since the financial crisis of 2008.
Tensions between the United States and Iran were also seen contributing to firming oil prices. Iranian Foreign Minister Javad Zarif said the launch of a U.S. maritime security mission in the Persian Gulf has turned the region into “a matchbox ready to ignite because America and its allies are flooding it with weapons.” Much of the world’s oil passes through Strait of Hormuz near the Persian Gulf. The U.S. security mission began after explosions damaged six tankers in May and June, and Iran seized a British-flagged tanker the following month.
A weakening dollar also propped up oil prices as investors feared the trade war would slow U.S. economic growth.
On Friday hedge funds raised their net long positions in U.S. crude futures and options in the week to Aug. 6. It was a signal some investors are trying to pick the bottom.
Naphtha
Asia’s naphtha spot prices remained under pressure due to ample supplies and cracker maintenance.
South Korea’s YNCC paid a discount of about $2 a tonne to Japan quotes on cost-and-freight (C&F) basis for open-specification naphtha scheduled for second-half September delivery to Yeosu. The price was about four times lower than what it had paid on July 10. Hanwha Total was also in the market, but buying heavy full-range grade for second-half September delivery to Daesan.
Indonesia’s only naphtha cracker operated by Chandra Asri is already in shut down mode since the start of August and this will last 55 days for maintenance and expansion works. Come October, the only cracker in the Philippines operated by JG Summit will also be in maintenance and expansion mode. Formosa Petrochemical also has a scheduled maintenance at one of its three crackers starting next week.
The August crack is lower at -$ 7.35 /bbl.
The September crack is at -6.35 / bbl.
Gasoline
No fresh news on the gasoline market. Light distillate stocks in Singapore rose by 288 kb to 10.28 million barrels. Gasoline stock in ARA rose marginally to 1.27 million tonnes
The August crack is steady at $ 6.95 / bbl.
The September crack is at $ 6.10 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10 ppm sulphur content inched lower by a cent to a premium of 3 cents a barrel to Singapore quotes on Thursday.
Cash premiums for jet fuel dropped to 4 cents a barrel to Singapore quotes, the lowest differentials since July 2. They were at a premium of 12 cents a barrel on Wednesday.
Asia’s cash differentials for jet fuel fell on Thursday, to their lowest in more than five weeks, hurt by muted buying interest in the physical market.
The jet cash differentials have shed about 90% since hitting a multi-month peak of 38 cents a barrel on July 30. The aviation fuel market in the region got a boost from summer demand, which has been easing as the holiday travelling season is getting over. Asia-Pacific airlines posted a rise of 4.7% in June passenger demand, compared with the same month in 2018.
Middle distillate stocks in Singapore fell by 522 kb to 9.89 million barrels. These are the lowest levels in 11 weeks.
The August crack for 500 ppm Gasoil is much higher at $ 15.80 /bbl with the 10 ppm crack at $ 16.70 / bbl. The regrade is at – $ 0.25 /bbl.
The September crack for 500 ppm Gasoil is at $ 16.55 /bbl with the 10 ppm crack at $ 17.25 / bbl. The regrade is at – $ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high-sulphur fuel oil (HSFO) extended losses on Thursday, pulling further away from record highs hit late last month amid rising inventories of the fuel.
The 380-cst HSFO Sept/Oct time spread fell to about $15.50 per tonne on Thursday, while the front-month 380-cst HSFO barge crack was at about minus $14 a barrel against Brent crude. By comparison, the front-month Sept/Oct time spread had settled at a premium of $21 per tonne in the previous session, while the front-month barge crack was at minus $14.28 a barrel.
This came as Singapore fuel oil inventories jumped for a second straight week, hitting a six-week high in the week to Aug. 7 amid surging net imports. Onshore fuel oil stocks rose by 2.835 million barrels from the previous week to 21.917 million barrels.
Compared with year-ago levels, this week’s onshore fuel oil inventories were 53% higher.
The August 180 cst crack has collapsed to – 7.55 / bbl with the visco spread at $ 1.25 /bbl.
The September 180 cst crack is at – 8.45 / bbl with the visco spread at $ 1.65 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh recommendations 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.