Crude Oil
Oil prices retraced on Monday on signs that the impact of a tropical storm on U.S. Gulf Coast production and refining would be short-lived. Brent crude futures settled 24 cents lower at $66.48 a barrel. WTI crude futures settled 63 cents lower at $59.58 a barrel.
One U.S. Gulf Coast refinery was restarting after shutting under threats of Tropical Storm Barry, while other refineries in the path of the storm continued to operate. U.S. offshore oil producers restarted 4% of the production shut by Barry last week, according to a report on Monday by the U.S. Bureau of Safety and Environmental Enforcement (BSEE).
China’s oil throughput rose to a record 13.07 million barrels per day in June, up 7.7% from a year earlier, following the start-up of two new large refineries, official data showed. Still, economic growth of just 6.2% in the second quarter of 2019 – the weakest in 27 years – highlighted the impact of trade tensions with Washington and raised the possibility that more incentives might be needed to jump-start the economy.
Easing tensions between the West and the Middle East also weighed on oil futures. Iranian President Hassan Rouhani said in a televised speech on Sunday that Iran was ready to hold talks with the United States if Washington lifted sanctions and returned to the 2015 nuclear deal it quit last year.
India’s imports declined to their lowest level in four months in June to $40.29 billion, down 9% from a year ago, indicating weakening consumption in Asia’s third largest economy
Naphtha
Asia’s naphtha crack was at a 1-1/2 week low of $33.15 a tonne on Monday.
YNCC has an existing contract for cargoes delivering in August 2019 to July 2020, signed in May this year at a premium of about $1 a tonne to Japan quotes C&F. Spot demand for naphtha was mostly muted on Monday after a string of purchases last week by buyers including Malaysia’s Titan, Taiwan’s Formosa and South Korea’s YNCC, Hanwha Total and Lotte Chem.
The August crack is lower at -$ 6.05 /bbl
Gasoline
Asia’s gasoline margin was at a two-session low of $8.37 a barrel. The current level is 60 cents below this year’s highest of $9.35 a barrel hit on April 12. Overall, the light distillates margins were sharply higher than a month ago, when naphtha crack was at a discount and the gasoline margin was below $3.20 a barrel.
The August crack is lower at $ 7.60 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for gasoil with 10ppm sulphur content were at 7 cents a barrel to Singapore quotes on Monday, compared with a discount of 14 cents per barrel on Friday.
The July-August time spread for 10ppm gasoil traded at a premium of 1 cent a barrel on Monday. The spread was at a discount of 15 cents a barrel on Friday.
Cash premiums for jet fuel were at 26 cents a barrel to Singapore quotes on Monday, up from 24 cents a barrel on Friday.
The August crack for 500 ppm Gasoil is lower at $ 15.15 /bbl with the 10 ppm crack at $ 15.85 / bbl. The regrade is at +$ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums of Asia’s 380-cst high-sulphur fuel oil (HSFO) extended losses amid weaker deal values for cargoes of the fuel in the Singapore trading window on Monday.
Cash premiums for 380-cst HSFO fell to $17.80 per tonne to Singapore quotes, down from $19.78 a tonne in the previous session and a record $24.31 on Thursday.
Singapore marine fuel sales slipped to a two-month low of 3.92 million tonnes in June, down 2.2% from the previous month and 0.1% lower than the same time last year, data from the Maritime and Port Authority of Singapore (MPA) showed. Reduced shipping traffic to Singapore stemming largely from ongoing U.S.-China trade tensions has continued to weigh on demand for marine fuels, or bunkers, in June.
The August 180 cst crack has tumbled to – $ 0.50 / bbl with the visco spread at $ 0.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The tumbling of the fuel oil cracks over the last few days underscores the importance of hedging. Those of us who hedged the August Fuel Oil cracks at levels close to $ 4.00 /bbl have reaped handsome dividends from their activities. Nothing fresh to do 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.