Crude Oil
Brent crude strengthened late on Thursday, recouping some of its losses from the previous session, as market focus returned to concerns about spare capacity following a warning from the International Energy Agency (IEA). Brent crude oil gained $1.05 a barrel to settle at $74.45, rebounding from a session low of $72.67.U.S. crude settled down 5 cents at $70.33 a barrel.
In their monthly report yesterday, the IEA said
- OECD stocks increased by 13.9 million barrels. This is roughly half the increase shown normally at this time of the year.
- Demand for 2018 was forecast to be growing at 1.4 mb /d up 29 kb/d. Demand for 2019 was still pegged at 1.38 mb/d.
- Non-OPEC Supply growth for 2018 was downgraded by 72 kb/d to 1.97 mb/d. Non-OPEC Supply growth for 2019 was increased by 116 kb/d to 1.84 mb/d.
Naphtha
Asia’s naphtha crack rose for the fourth straight session to hit a 1-1/2 month high of $98.95 a tonne on Thursday, thanks to recent demand. South Korea and Taiwanese buyers have bought at least 180,000 tonnes of naphtha for second-half August delivery this week.
Analysts forecast that U.S. stockpiles of gasoline fell by about 800,000 barrels last week. U.S. gasoline inventories had fallen by 1.5 million barrels in the week ended June 29. Automobile sales in China rose 4.8 percent in June from a year earlier to 2.27 million vehicles as demand remained strong.
The July crack is steady at -$ 0.45 / bbl. The August crack is at -$ 0.35 /bbl
Gasoline
Asia’s gasoline crack was also up, reaching $5.71 a barrel, the highest since June 18. Automobile sales in China rose 4.8 percent in June from a year earlier to 2.27 million vehicles as demand remained strong.
Singapore’s onshore light distillates stocks, which comprise mostly gasoline and blending components for petrol, jumped 12.6 percent or 1.52 million barrels to reach a five-week high of 13.6 million barrels in the week to July 11. Stocks in ARA rose marginally by 3 KT to 988 KT
The July crack has dropped to $ 7.95 / bbl. The August crack is at $ 8.60 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for jet fuel dipped on Thursday after inventories for middle distillates in Singapore climbed to their highest in three months. Cash premiums for jet fuel were at 13 cents a barrel to Singapore quotes, down from 16 cents a barrel on Wednesday.
Meanwhile, cash differentials for gasoil with 10ppm sulphur content were at a discount of 24 cents a barrel to Singapore quotes, compared with a discount of 23 cents on Wednesday.
Singapore onshore middle-distillate stocks rose 2.3 percent in the week to July 11 to 9.73 million barrels. Since the start of the year, Singapore middle-distillate inventories have averaged 9.1 million barrels a week, compared with a weekly average of about 12 million barrels in 2017. Overall, onshore middle-distillate inventories were some 17 percent lower than a year ago. ARA gasoil stocks increased by 113 KT to 2.2 million tons, their highest level since April.
The July crack is lower at $ 12.45 / bbl with the 10 ppm crack at $ 13.35 /bbl. The regrade is higher at $ 1.65 /bbl.
The August crack is at $ 13.10 / bbl with the 10 ppm crack at $ 14.00 /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 discount to Dubai crude was at its narrowest in more than three weeks on Thursday following steep losses in benchmark crude oil prices in the previous session. The August 180-cst fuel oil crack to Dubai crude was at a discount of $1.82 a barrel on Thursday, up from minus $2.03 a barrel in the session before.
This also came as inventories of fuel oil in Singapore dropped to a more than 3-1/2-year low after falling for four consecutive weeks. Singapore weekly onshore fuel oil inventories fell 2.4 percent or 412,000 barrels to 17.115 million barrels in the week ended July 11, their lowest since November 2014. Stocks in ARA dropped by nearly 20% to 1.2 million tons. This is still a seasonal high for the last several years.
The July crack is higher at -$ 1.25 / bbl with the visco spread down to $ 1.00 /bbl
The August crack is lower at -$ 1.80 / bbl with the visco spread at $ 1.20 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The Cal-19 Middle Distillate cracks continue to ease out. The July and August Fuel Oil hedges look to be tight. However, this is the time to remember we have locked in a margin we are happy with.
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.