Oil prices tumbled 4% on Wednesday to their lowest settlements in nearly five months, weakened by another unexpected rise in U.S. crude stockpiles. Brent crude futures fell $2.32 to settle at $59.97 a barrel, it’s lowest close since Jan. 28. WTI crude futures ended $2.13 lower at $50.72 a barrel, its lowest settlement since Jan. 14..
Trade tensions between the United States and China, the world’s two biggest oil consumers, also weighed on prices. U.S. President Donald Trump on Wednesday said he had a feeling that a trade deal could be reached, while again threatening to increase tariffs on Chinese goods if they do not make a deal.
Hedge fund managers are liquidating bullish oil positions at the fastest rate since the fourth quarter of 2018 due to increasing fears about the health of the global economy.
The U.S. EIA reported domestic crude stockpiles rose unexpectedly for the second week in a row, climbing 2.2 million barrels last week after analysts had forecast a decrease of 481 KB. At 485.5 million barrels, U.S. commercial stocks were at their highest since July 2017 and about 8% above the five-year average for this time of year, the EIA said. The EIA on Tuesday cut its forecasts for 2019 world oil demand growth, which also pressured oil futures.
The build in stockpiles notwithstanding healthy increase in demand is a bit puzzling and it shows up in our material balance statement loud and clear. We wouldn’t be surprised to see a huge drop in stocks next week.
Asia’s naphtha physical crack discount narrowed for the third straight day on Wednesday after the value flipped into negative territory last week for the first time in over a decade. Benchmark open-specification naphtha margin was at a smaller discount of $2.15 a tonne versus $3.50 on Tuesday and $15.80 a tonne on June 7. Expectations of demand picking up from next week gave the market some support.
The June crack is lower at – $8.85 /bbl. The July crack is at -$7.35 /bbl
No fresh news on the gasoline markets. Gasoline stocks in Fujairah once again climbed above 10 million barrels. They were reported at 10.15 million barrels, up 319 KB
The June crack is lower at $ 3.90 /bbl. The July crack is at $ 4.60 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for 10ppm gasoil were at a discount of 23 cents a barrel to Singapore quotes on Wednesday, the biggest discounts since May 3. They were at a discount of 20 cents per barrel a day earlier.
The gasoil market in Asia has ample supplies as regional refineries are returning from spring turnarounds. China and India are expected to add more barrels over the next couple of months. India’s domestic consumption for diesel drops during the monsoon months, which tends to push up the country’s exports.
Cash differentials for jet fuel flipped back into premiums of 8 cents a barrel to Singapore quotes on Wednesday, compared with a 31-cents discount on Tuesday..
The June crack for 500 ppm Gasoil is higher at $ 12.80 /bbl with the 10 ppm crack at $ 13.50 / bbl. The regrade is at -$ 0.00 /bbl
The July crack for 500 ppm Gasoil is at $ 14.10 /bbl with the 10 ppm crack at $ 14.80 / bbl. The regrade is at +$ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s cash premiums for mainstay 380-cst fuel oil slipped on Wednesday but remained within sight of a multi-month high touched last week.
Cash premiums for 380-cst fuel oil were at $2.50 a tonne to Singapore quotes, compared with $3.10 a tonne on Tuesday. The premiums had touched a three-month high of $3.30 per tonne on Friday. The cash differentials, which have more than doubled in the last two weeks, are currently at their strongest levels for this time of the year since 2015.
The June/July time-spread for 380-cst narrowed by 25 cents to $5 a tonne on Wednesday.
The June180 cst crack has dropped to – $ 1.20 / bbl with the visco spread at $ 1.75 /bbl.
The July180 cst crack is at – $ 1.25 / bbl with the visco spread at $ 1.25 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No Fresh action 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.
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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.