Oil prices once again rose on Tuesday after an OPEC report forecast a higher demand in 2018. amid an uptick in sentiment after Saudi Arabia said its oil minister held talks with counterparts over the possibility of extending the supply-cut agreement beyond March 2018. Brent settled up 43 cents at $54.27 /bbl while WTI rose by 16 cents to settle at $48.23 /bbl
OPEC, in its monthly report yesterday said that oil production in August had dropped to 32.76 mb/d in the wake of falling production from Venezuela, Iraq, the UAE and Saudi Arabia which offset rising output from Nigeria. It expected demand to rise next year by 1.35 mb/d to 98.12 mb/d.
In the US, the EIA has lowered estimates for crude oil production for 2017 and 2018 to 9.25mb/d in 2017 and 9.84mb/d in 2018. Those estimates are 100kb/d and 70kb/d lower than previous month’s estimates. US oil demand is also expected to grow by 350kb/d in 2017 and 400kb/d in 2018, an upgrade from previous estimates of 340kb/d and 330kb/d.
All this is supportive for crude oil prices
The American Petroleum institute reported that crude oil inventories increased by 6.18 million barrels last week with Cushing stocks increasing by 1.32 million barrels. Gasoline stocks drew 7.9 million barrels while distillate stocks drew 1.81 million barrels.
While crude stocks rose a lot more than expected (2.3 mb), gasoline stocks drew a lot more than expected as well (-2.4). Therefore it is difficult for the market to draw any definitive conclusions from this data. The market will be looking to the official data releasing today for direction.
Asian naphtha cracks have once again rebounded to settle near to previous highs. Apart from strong demand, this has been aided by unavailability of LPG supplies from the US which serve as an alternative feedstock. This situation may take a while to ease off.
The paper market though, is still relatively softer in September as the Naphtha crack is lower at $ 3.10 /bbl. October is valued at $ 3.05 /bbl. which is 5 cents higher.
Gasoline cracks have once again eased with crack for September being valued at $ 13.95 /bbl. October is valued at $ 12.15 /bbl.
The buying from Winson oil was significantly lower yesterday at 550 kb while UNIPEC did not buy any more barrels. Between the two of them, they have purchased 12.45 million barrels since last Monday.
The high cracks appear to have attracted a lot of selling as the September gasoil crack now at $ 14.70 /bbl (around 75 cents lower. The October crack is $14.34 /bbl. The regrade for September is unchanged at – $ 0.90 /bbl. The October regrade is at – $ 0.50 /bbl
Fuel Oil cracks have weakened further as buying activity in the window came virtually to a standstill with only 1 trade in 180 cst being reported yesterd.
The 180 cst crack is valued lower at -$1.75 / bbl for September. The visco is valued at $ 0.70 /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