Crude Oil
Oil rose about 1% on Friday after attacks on two oil tankers in the Gulf of Oman this week raised concerns about potential supply disruptions. Brent settled 70 cents higher at $62.01 a barrel. WTI crude futures rose 23 cents to $52.51 a barrel.
It was the second time in a month tankers have been attacked in the world’s most important zone for oil supplies as tensions increase between the United States and Iran. Washington blamed Iran for Thursday’s attacks, prompting a denial and criticism from Tehran. On Friday, a U.S. official said Iranian military fast-boats in the Gulf of Oman were preventing two privately-owned tug boats from towing away one of the damaged tankers.
Nevertheless, Brent registered a weekly decline of around 2%, putting it down for a fourth week in a row, while U.S. crude lost almost 3%.
U.S. energy firms reduced the number of oil rigs operating for a second week in a row, with the country’s production growth expected to slow as crude prices dropped close to their lowest levels of the year and most drillers cut spending. Drillers cut one oil rig in the week to June 14, bringing the total count down to 788, still the lowest since February 2018. During the same week a year ago, 863 rigs were operating.
Hedge funds and other money managers cut their bullish crude bets in the latest week as crude held steady in a narrow range, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The speculator group cut its combined futures and options positions in New York and London by 52,196 contracts to 146,688 during the week to June 11.
Naphtha
Asia’s naphtha crack returned to the positive zone, after being at discounted levels since the value turned negative last week for the first time in over a decade.
Open-specification naphtha crack was at a premium of $3.45 a tonne to Brent crude as concerns over war risks in the Middle East and expectations of improved demand in South Korea as crackers resume operations following outages lifted the value.
Like with crude, naphtha buyers rely on heavyweights ADNOC, Saudi Arabia, Qatar and Kuwait for the petrochemical feedstock as Middle East supplies at least 2 million tonnes of naphtha a month to Asia, which is structurally short of the fuel.
South Korea and Japan alone import more than 2 million tonnes of naphtha a month on the average. In May, Japan imported nearly 1.24 million tonnes of naphtha.
The June crack is higher at – $8.25 /bbl. The July crack is at -$6.65 /bbl
Gasoline
No fresh news on the gasoline markets. Light distillate stocks in ARA rose by 142 KT to a 4 month high of 1.22. million tonnes.
The June crack is lower at $ 3.95 /bbl. The July crack is at $ 4.80 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil were at a discount of 16 cents a barrel to Singapore quotes, compared with a discount of 19 cents a barrel on Thursday.
ARA onshore inventories for Gasoil rose to 2.98 million tonnes, a level not seen since October last year.
Cash differentials for jet fuel were at a premium of 4 cents a barrel to Singapore quotes on Friday, down from 5 cents on Thursday.
The June crack for 500 ppm Gasoil is higher at $ 13.25 /bbl with the 10 ppm crack at $ 13.95 / bbl. The regrade is at +$ 0.00 /bbl
The July crack for 500 ppm Gasoil is at $ 14.65 /bbl with the 10 ppm crack at $ 15.35 / bbl. The regrade is at +$ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s cash premiums for 380-cst high-sulphur fuel oil rose on Friday amid steady buying interest while refining margins for the heavier distillate posted the biggest weekly drop in more than two months.
Cash premiums for 380-cst high-sulphur fuel oil (HSFO) were at $2.97 a tonne to Singapore quotes, up from $2.08 on Thursday.
The June/July 380-cst time-spread widened its backwardated structure and traded at about $4.25 a tonne on Friday, compared with $3 in the previous session.
Asia’s 180-cst fuel oil crack to Dubai crude for July dipped to minus $1.73 a barrel on Friday, compared with minus $1.61 a day earlier.
The more actively-traded 380-cst barge crack to Brent crude for July edged up to minus $8.31 a barrel during Asian trade on Friday, against minus $8.55 on Thursday. The 380-cst barge crack, however, has weakened by about 27% this week for its biggest weekly decline since early April.
Fuel oil stocks in ARA were more or less unchanged at 1.07 million tonnes.
The June180 cst crack has improved to – $ 2.20 / bbl with the visco spread at $ 1.85 /bbl.
The July180 cst crack is at – $ 1.85 / bbl with the visco spread at $ 1.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
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.
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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.