Crude Oil
Oil prices continued to fall on Tuesday as the IMF slashed 2019 global growth rate to 3%, the lowest since 2009. Brent crude lost 61 cents to settle at $58.74 a barrel. WTI crude fell 78 cents to $58.74 / bbl.
Earlier in the session, both Brent and WTI fell by more than $1 a barrel following a report overnight that China’s factory gate prices in September declined at the fastest pace in more than three years . Also, customs data on Monday showed Chinese imports contracted for a fifth straight month.
The oil market retraced early losses after reports Britain and the EU made headway in eleventh-hour talks to reach a Brexit deal. Providing more support, OPEC Secretary-General Mohammad Barkindo said the Organization of the Petroleum Exporting Countries and allied producers “will do whatever (is) in its power” to sustain oil market stability beyond 2020.
Freight rates to ship US crude to Asia eased on Tuesday from record levels as the shock of a global tanker shortage due to US sanctions on a Chinese firm began to fade, according to market sources.
India’s Nayara Energy has been using Russian giant Rosneft as an intermediary to acquire Venezuelan oil, paying it in fuel rather than cash to avoid violating US sanctions, three sources with knowledge of the transactions said.
Naphtha
Asia’s naphtha crack almost reached a 1-1/2 year high of $117.20 a tonne on Tuesday while the inter-month timespread rose above a 6-1/2 year high of $27 on strong demand and supply disruptions. The Asian naphtha crack is now about 410% higher versus Sept. 13, a day before Saudi oil facilities were attacked.
JBC Energy says 2.4 million barrels of capacity was scheduled to be offline this month in Asia. Another 700 kbpd of capacity is expected to be offline in the Middle East, including expected run cuts of 460 kbpd in Saudi Arabia. The crunch has resulted in spot premiums holding at multi-year highs.
Japan’s Idemitsu which recently paid a premium of $30 a tonne to Japan quotes on a cost-and-freight (C&F) basis for naphtha scheduled for November delivery, is one of the many petrochemical makers hurt by tight supplies.
The October crack is higher at – $ 1.25 / bbl.
The November crack is at – $ 1.30 / bbl.
Gasoline
Asia’s gasoline crack was at a three-session high of $9.37 a barrel; supported by demand. So far in October, some 567 KT of gasoline and blending components have been delivered from Europe and the Mediterranean to North America.
The October crack is higher at $ 9.55 /bbl
The November crack is at $ 8.30 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for 10 ppm gasoil rose on Tuesday to their highest premiums since October last year, buoyed by firmer buying interest amid tighter supplies. Cash premiums for 10ppm gasoil climbed to $1.35 a barrel to Singapore quotes, compared with a premium of $1.30 a barrel on Monday.
Cash premiums for the benchmark gasoil grade in Singapore have more than trebled in the last two weeks, partly helped by limited supplies due to ongoing refinery maintenance in the region. The gasoil market has also been riding on expectations of firmer demand as shippers switch to cleaner marine fuels next year.
Cash premiums for jet fuel fell by 3 cents to 12 cents a barrel to Singapore quotes on Tuesda.
The October crack for 500 ppm Gasoil has risen to $ 15.15 /bbl with the 10 ppm crack at $ 16.95 / bbl. The regrade is at – $ 0.00 /bbl
The November crack for 500 ppm Gasoil is at $ 16.49 /bbl with the 10 ppm crack at $ 17.40 / bbl. The regrade is at + $ 0.75 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst high-sulphur fuel oil (HSFO) crack to Dubai crude, buoyed by falling crude prices on Tuesday, edged away from a record low the previous session. Near-term sentiment, however, remained bearish around the HSFO market amid the anticipated drop in demand for HSFO ahead of the Jan. 1, 2020, cap on the sulphur content in marine fuels to 0.5%, down from 3.5% currently.
The front-month Singapore 380-cst HSFO crack narrowed its discount to Dubai crude to minus $18.61 a barrel, up from a record low of minus $19.28 a barrel the previous session.
The October 180 cst crack is higher at -$ 14.80 / bbl with the visco spread at $ 1.25 /bbl.
The November 180 cst crack is at -$ 15.15 / bbl with the visco spread at $ 2.75 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The collapse in the Middle Distillate cracks today means that we can close out a few more positions profitably. No fresh action for 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.