Crude Oil
Oil prices slumped more than 4 percent on Monday, with Brent reaching a three-month low, as Libyan ports reopened and traders eyed potential supply increases by Russia and other producers. Brent crude futures fell $3.49 to settle at $71.84 a barrel. WTI crude futures fell $2.95 to settle at $68.06 a barrel.
Brent’s dive pushed it to a session low of $71.52 during the session, its lowest since mid-April. Falling prices offset gains late last week caused by supply outages in Libya, a labor dispute in Norway and unrest in Iraq.
Concern over China’s second-quarter GDP growth also was negative for prices during Monday’s session. The country’s economy expanded at a slower pace as Beijing’s efforts to contain debt hurt activity, while June factory output growth weakened to a two-year low in a worrying sign for investment and exporters as a trade war with the United States intensified.
Production in Libya remained under threat. While its ports are reopening, output at Libya’s Sharara oilfield was expected to fall by at least 160,000 bpd after two workers were abducted by an unknown group, the National Oil Corporation said on Saturday.
Two protesters in Iraq died on Sunday in clashes with security forces in the town of Samawa amid anger in southern cities over public services and corruption. Demonstrations have yet to affect crude production.
Saudi Arabia and Kuwait are making headway on restarting the Khafji and Wafra fields in the Neutral Zone as early as December. The two field have a combined capacity of around 500 kb/d.
Russian President Vladmir Putin said Russia and the US can work together to regulate international markets to curb extreme price volatility, after a joint briefing with US President Donald Trump.
Naphtha
Asia’s naphtha crack fell 4% to settle at $94.23 a tonne, apparently dragged down by an increase in crude prices over Thursday and Friday. However, demand for naphtha remained firm as reflected by an increase in cash premiums paid for the physical product.
The August crack is slightly lower at -$ 0.55 /bbl
Gasoline
Asia’s gasoline crack rose 4 percent to $6.13 a barrel, its highest since June 14, having lost more than 30 percent against the same period last year.
The August crack has, however, dropped to $ 8.15 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s 10ppm cash differential to Singapore price persists at discount levels, dragged by a stubborn glut that could last through third quarter. Cash differential of the benchmark grade, at 20 cents a barrel on Monday, was only 5 cents higher than what it was on July 2 when the discount at 25 was the lowest since late 2011.
High supplies, especially from China, were a key factor behind the slump. It was unclear how much China has exported in June but its refinery throughput last month rose 8 percent from a year ago to 49.78 million tonnes, or 12.11 million barrels per day, and was up 1.4 percent from May on a daily basis. Between January and May, China exported about 8.5 million tonnes of diesel, up 27 % versus 2017 over the same periods.
Jet fuel fundamentals were better versus gasoil, supported by air travel demand although high oil prices were starting to hurt airlines’ margins..
The August crack is lower at $ 13.15 / bbl with the 10 ppm crack at $ 14.05 /bbl. The regrade is at $ 1.15 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Strong buying interest on Monday lifted Asia’s 380-cst fuel oil cash premium to a more-than-three-year high just as expectations of ongoing supply constraints continued to feed bullish sentiment.
A lack of fuel oil arbitrage shipments into Asia since the start of the summer months have led to narrower availability of finished grade bunker fuels in Singapore and are expected to last through August. The 380-cst fuel oil cash premiums were 28 cents a tonne higher from the previous session at $5.56 a tonne to Singapore quotes on Monday, the widest premium since June 2015.
The August crack is slightly lower at -$ 1.60 / bbl with the visco spread at $ 1.30 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The Cal 19 cracks continue to revert towards mean.
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.