Crude Oil
Crude oil futures steadied on Tuesday as the focus turned to falling inventories in the United States and further output constraints in Venezuela and Libya. Brent futures rose 32 cents to $72.16 a barrel, after earlier trading as low as $71.35 a barrel, its lowest level since April 17. West Texas Intermediate crude (WTI) settled up 2 cents at $68.08 a barrel.
Supply disruptions in Venezuela returned to the forefront as two of the country’s four crude upgraders are scheduled to undergo maintenance in the next few weeks.
Late on Tuesday, Libya’s National Oil Corp said it had declared force majeure on crude oil loadings at Zawiya port as of Monday. The oil company said output from its Sharara field had fallen by 125,000 barrels per day (bpd) following the recent attack and kidnapping of four employees of the oil company Akakus at the field.
Platts reported that Iraqi oil output remains unaffected by unrest which has been spreading in the country. On Tuesday, 250 protestors gathered at the 475 kb/d Zubair field, although production appears to have been unaffected. Protests are said to have escalated in the past few days, spreading to more provinces.
API Data
The API reported builds in Crude, Gasoline as well as distillate stocks against market expectations. If confirmed by the DOE, this may act as a further dampener on Crude Oil Prices.
Naphtha
The front month backwardation for Naphtha is showing signs of rising with first half September trading at $ 8 /MT over first half October. Premiums continue to stay firm.
The August crack, however, has dropped to -$ 1.00 /bbl
Gasoline
Not much news on the gasoline markets today though cracks appear to be slightly firmer
The August crack is marginally higher at $ 8.20 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for 10ppm gasoil widened discounts on Tuesday, lingering near their lowest levels this year, as higher supply and seasonal demand weakness continued to dampen market sentiment. Cash discounts for gasoil with 10ppm sulphur content widened to 21 cents a barrel to Singapore quotes, from a discount of 20 cents on Monday.
Limited arbitrage opportunities and China’s record-breaking gasoil exports have built a surplus of the fuel in Asia and it is unlikely the glut would subside through the third quarter. Between January and May, China exported about 8.5 million tonnes of diesel, up 27 percent from 2017 over the same periods.
Jet fuel cash differentials narrowed their discount by a cent, while the physical market in the Singapore window remained muted with no offers or trades. Jet fuel cash differentials were at a discount of 1 cent a barrel to Singapore quotes, compared with a discount of 2 cents on Monday.
The jet fuel market is likely to remain slow until the end of the quarter, after which winter heating demand for kerosene will start picking up.
The August crack is lower at $ 13.05 / bbl with the 10 ppm crack at $ 13.95 /bbl. The regrade is at $ 1.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst fuel oil cash premium extended gains on Tuesday climbing to fresh multi-year highs as ongoing concerns of supply constraints continued to fuel bullish sentiment. Adding to a persistent shortage of finished-grade fuel oil that has characterized the Singapore market since May, the delay of at least two tankers laden with fuel oil bound for Singapore could see prompt supply tightness being prolonged over the near term.
The 380-cst fuel oil cash premium climbed to $6.25 a tonne to Singapore quotes on Tuesday, up from $5.56 per tonne in the previous session and its widest premium since so-called ‘bull play’ in June 2015.
The August 180 cst crack is however much lower at -$ 2.00 / bbl with the visco spread at $ 1.30 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
After nearly 5 months from the time we first started hedging Cal 19, our hedges are now ALL looking good. We close one more Cal-19 hedge today as our target on the same has been met.
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.