Crude Oil
Oil futures rose on Wednesday, with Brent reaching $80 a barrel, after a larger-than-expected drop in U.S. crude inventories and as U.S. sanctions on Iran added to concerns over global oil supply. Benchmark Brent crude futures rose 68 cents to settle at $79.74 a barrel. The global benchmark earlier reached $80.13 a barrel, its highest level since May 22. WTI crude futures rose $1.12 to settle at $70.37 a barrel, a one-week high.
Russian Energy Minister Alexander Novak on Wednesday warned of the impact of the U.S. sanctions against Iran.
OPEC cut its forecast for oil demand growth in 2019 in its monthly report to 1.41 million barrels per day and said rising challenges in some emerging and developing countries could negatively impact global economic growth..
Markets were also watching the progress of category 4 Hurricane Florence, which is expected to make landfall on the U.S. East Coast by Friday. Crude output will not be affected by the massive storm, but the evacuation of more than a million residents, as well as businesses, has prompted a near-term spike in fuel demand.
While the DOE reported draw of 5.3 million barrels was lesser than that projected by theAPI, it has send crude stocks to below 400 million barrels for the first time since January 2015. Stocks have fallen due to an increase in run rates, a drop in imports and an increase in exports.
However, the significant builds in both gasoline and distillate stocks should temper the bullish sentiment in crude oil a bit. Gasoline stocks are at a seasonal high and the recovery of Distillate stocks puts levels just below the five year average. The demand drop in Distillate stocks of over 1 million barrels per day is large.
For detailed charts visit our US DOE Data page
Naphtha
Asia’s naphtha crack eased 1.9% to $89.55 a tonne, the lowest since July 9, while prices in Mailiao, Taiwan, have flipped into a discount for the first time since February on the back of persisting high supplies.
The balance September crack is higher at -$ 0.80 /bbl. The October crack is at -$ 0.10 /bbl
Gasoline
Asia’s gasoline crack on the other hand was at a six-session high of $8.54 a barrel. Japan’s gasoline stocks in the week to Sept. 8 fell 70,000 barrels to 9.78 million barrels. However stocks in Fujairah’s FOIZ rose by 790 kb to 6.68 million barrels
The balance September crack has improved to $ 10.15 /bbl. The October crack is at $ 9.15 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10ppm sulphur content were at 44 cents a barrel to Singapore quotes, compared with 61 cents a barrel on Tuesday.
The Sept/Oct spread for 10ppm gasoil, which has stayed in a backwardated structure for over a month, narrowed to 85 cents a barrel, from $1 a barrel on Tuesday.
Meanwhile, cash differentials for jet fuel widened their discounts to 42 cents a barrel to Singapore quotes on Wednesday, compared with a discount of 35 cents on Tuesday. Distillate stocks in Fujairah increased by 85 kb to 4.18 million barrels.
The balance September crack has dropped to $ 15.00 / bbl with the 10 ppm crack at $ 15.75 /bbl. The regrade is lower at – $ 0.65 /bbl.
The October crack is at $ 14.95 / bbl with the 10 ppm crack at $ 15.75 /bbl. The regrade is at $ 0.40 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums of 380-cst high sulphur fuel oil edged up to a near two-week high on Wednesday amid steady buying interest for physical cargoes in the Singapore trading window.
Fuel oil inventories in Fujairah climbed 547 KB to a three-week high of 8.06 million barrels in the week ended Sept 10.
The balance September180 cst crack is lower at -$ 5.35 / bbl with the visco spread at $ 0.60 /bbl.
The October 180 cst crack is at -$ 5.05 / bbl with the visco spread at $ 1.05 /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.