Crude prices collapsed yesterday as a wave of bearish news hit the markets. Brent closed $ 1.37 cents lower at $50.73 /bbl, and WTI settled $1.23 cents lower at $47.59 /bbl.
The news that the market reacted to the most was the absence of further belligerence from both North Korea and Donald Trump. After it seemed reasonably clear to market players that the likelihood of the situation escalating much higher was low, it took cognizance of a Reuters report that Chinese refinery runs were at a 10 month low in July due to a supply glut.
Shell also notified that it had lifted Force Majeure on its Bonny Light supplies.
To add to that there was the report that US Shale production is forecast to rise to 6.15 million bpd
This emphasises what we have been mooting since the time the cuts were first announced over 9 months ago i.e. a mere supply cut is not going to boost prices. We actually need product demand for that to happen.
Prices plunged through the first two supports we had mentioned yesterday and are now resting on the 100 DMA.
Bulls will look to the API data being released today for succour.
The physical Naphtha market continued to show strong demand. most deals were reported at a discount, there are talks of deals being done at a small premium for September as well.
The August crack is at $1.40/bbl today with September being valued at $ 1.30 /bbl
The Gasoline crack in the prompt eased yesterday, but demand is reported to continue to be firm.
Paper crack values are marginally strong @ 13.6 /bbl and $ 12.10 / bbl for August and September respectively.
Gasoil continues to remain firm with Saudi Aramco seen as a buyer for multiple cargos. These purchases are reportedly to fill up the demand gap caused by the planned shut down of its condensate splitter at the Ras Tanura refinery.
Both, the August as well as the September Gasoil cracks are valued at $ 13.60 /bbl. Regrade is at -$0.60 /bbl for both August and September
With around 7.3 – 7.4 million tons of Fuel Oil being expected to arrive to East Asia this month (as compared to 5.5 million tons in July), cracks are expected to stay subdued if not fall further. However, for today, the cracks are higher on the back of cheaper crude making Fuel Oil more affordable
The 180 cst crack is at -$1.80 / bbl for August and -$ 1.70 for September. The visco spread is at $ 0.40 /bbl for August and $ 0.70 / bbl for September.
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