Crude Oil
Oil prices rose on Monday as OPEC reported that the global oil glut has been virtually eliminated. Brent gained $ 1.11 to settle at $ 78.23 /bbl. West Texas Intermediate crude rose 26 cents to settle at $ 70.96 /bbl. WTI’s discount to Brent was as much as $ 7.28 /bbl, its widest since Dec. 12 on surging U.S. output.
In its latest monthly report, OPEC now expects global oil demand to rise 1.65 mb/d this year (20 kb/d higher that previous forecast) and that OECD oil inventories now stand just 9 million barrels above the latest five year average. The cartel also sees non-OPEC supply growing 1.72 mb/d (10 kb/d higher than previous forecast) this year, adding that US shale output will face increasing logistical concerns.
India’s oil consumption rose 4.5% year on year in April to 17.7 m tons. Growth was led by LPG (+13% to 1.9 m tons) and gasoline (+9.3% to 2.3 m tons). Diesel demand also grew to 7.2 m tons, albeit at a slower y/y pace of 2.7% in April.
Aramco may purchase a 50% stake in India’s upcoming 300 kb/d Ratnagiri refinery, and is also seeking assurance that the complex will use mostly Saudi crude. The refinery is currently owned 50/25/25 by IOC, BPCL and HPCL, the three major Indian PSUs.
Naphtha
Asia’s naphtha crack slipped to $108.35 /MT on Monday after reaching $109.40 on Friday, its highest since early January. Buyers had mostly completed their purchases for cargoes scheduled for second-half June delivery while demand for naphtha scheduled for first-half July delivery has not started. However, fundamentals have recently been strong due to tighter supplies and firm demand, with spot premiums of Indian cargoes rising to around a three-year high last week.
The June crack has flipped back to negative territory at – $ 0.05 / bbl
Gasoline
Asia’s gasoline crack rose for a fourth straight session to reach $7.58 /bbl, its highest level since April 10. The gasoline crack’s improvement seems to be largely due to increase in demand for Naphtha (making less material available in the gasoline pool) combined with drop in stocks globally to more manageable levels from the record highs seen a few weeks ago.
The June crack has dropped to $ 11.05 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s jet fuel front-month crack to Brent crude edged to a four-session high on Monday amid weaker crude oil prices. However, the June/July jet fuel time spread narrowed its backwardated structure, easing to a premium of 22 cents a barrel, only 3 cents higher than a one-month low hit on Thursday. The weaker jet fuel market structure comes amid expectations of slowing demand and rising supplies as regional refiners return from scheduled maintenance.
India’s diesel sales in April climbed to 7.16 million tonnes, up from 6.97 million tonnes in the same period last year, while April jet fuel use edged up to 0.69 million tonnes from 0.61 million tonnes, official data showed.
The June crack has also decreased to $ 15.50 / bbl with the 10 ppm crack quoting at $ 16.15 /bbl. The regrade is steady at $ 0.60 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
After posting steady gains in the previous week, the front-month fuel oil crack shed early gains on Monday to trade lower. The June 380-cst fuel oil crack to Brent crude was trading at a discount of about $12 a barrel on Monday, after climbing as high as $11.70 a barrel earlier in the session. Last Monday, the fuel oil crack traded at about $12.70 a barrel.
Singapore marine fuel sales climbed to a three-month high of 4.233 million tonnes in April, up 1.6 percent from the previous month, but 0.5 percent lower compared with a year ago, data from the Maritime and Port Authority of Singapore (MPA) showed on Monday.
The June 180 cst crack has dropped to -$ 4.85 / bbl. The visco spread has increased to $ 1.50/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
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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.