Oil prices climbed above $80 a barrel on Thursday for the first time since November 2014, before retreating on a stronger dollar and lack of fresh supportive data to Wednesday’s levels. Brent rose 2 cents to settle at $ 79.30 /bbl. West Texas Intermediate crude settled flat at $ 71.49 /bbl.
In the meanwhile, in a joint statement, the Saudi and UAE energy ministers said that oil markets remain well-supplied, with the recent surge in oil prices driven by geopolitics and not fundamentals. We would agree with their views.
In another setback for the bulls, the European Commission President, Jean-Claude Juncker, said that Europe would begin a ‘blocking statute’ to keep the Iranian accord in place. The blocking statute is 1996 regulation that prohibits EU companies and courts from complying with foreign sanctions laws and stipulates that no foreign court judgements based on these laws have any effect in the EU.
In other news, Shell has declared force majeure on Bonny Light exports with immediate effect. This comes after the largest stream, Forcados, experienced delays after a leak on the 200-240kbd Trans-Forcados pipeline earlier this week.
Asia’s naphtha crack was at a two-session high of $104.95 /MT with demand seen firm. Cargoes for first half July delivery are seen to be trading at premiums of $ 15-16 / MT as compared to $ 13-14 /MT 10 days ago.
The June crack however has dropped to – $ 0.15 / bbl
Asia’s gasoline crack hit a 3-1/2 month high of $9.86 a barrel on Thursday, driven by demand as Indonesia was seeking higher-than-usual volumes of cargoes from the spot market. India’s BPCL was also seen in the market trying to source 91.2 Octane gasoline, a rare occurrence. This combined with a seasonal increase in demand for gasoline during Ramadan and the upcoming US driving season make the market well supported.
Light distillate stocks in Singapore jumped by 1.17 million barrels to 14.48 million barrels. This is a 6 week high for stocks which have climbed back to well above 2017 levels. Stocks in ARA also climbed marginally by 41 KT to 1.08 million tons.
The June crack has however dropped to $ 12.00 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash premiums for 10ppm gasoil slipped on Thursday but remained within close range of this year’s high, while middle-distillate inventories in Singapore plunged to their lowest in more than four years. The overall middle distillates market remained well supported in the near term, barring the seasonal impacts of a likely dip in demand during the monsoon and a potential rise in supply as refineries undergoing turnarounds return from maintenance. Cash differentials for gasoil with 10 ppm sulphur content slipped to 50 cents a barrel to Singapore quotes on Thursday, from 53 cents on Wednesday.
The Singapore gasoil cracks are currently near their highest levels in three years with 10ppm gasoil’s crack for June hovering around $16.70 a barrel over Dubai crude on Thursday. The middle distillates market would get tighter and the cracks could double as shipping companies start switching to lower-sulphur fuels to comply with the International Maritime Organization’s new regulations starting 2020, aimed at cutting carbon emissions
Meanwhile, cash premiums for jet fuel fell to 25 cents a barrel to Singapore quotes, compared with 30 cents a barrel on Wednesday..
Middle distillate stocks in Singapore dipped marginally by 28 KB to 7.33 million barrels. The last time stocks were seen at these levels was in November 2013. Middle distillate stocks in ARA
The June crack is stronger at $ 16.00 / bbl with the 10 ppm crack quoting at $ 16.70 /bbl. The regrade has dropped to $ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Discounts for the front-month barges 380-cst fuel oil crack to Brent crude continued to reflect the bullish market sentiment on Thursday. Fuel oil prices in the Singapore market have climbed since April on narrower supplies of finished grade fuel oil and blendstock material. While the availability of finished grade bunker fuel oil has improved over the past weeks, the market was likely to trade around its current level amid a firm seasonal demand. The June 380-cst fuel oil crack to Brent crude was trading at a discount of about $11.30 a barrel, from about minus $11.65 a barrel around the same time in the previous session. Meanwhile, the 380-cst fuel oil for June-July time spread was trading slightly lower on Thursday at about $3.15 a tonne.
Fuel Oil stocks in Singapore fell by 452 KB to 18.67 million barrels. The levels continue to be the lowest for this time of the year in the last 6 years. In the meanwhile, stocks in ARA rose by 253 KT to 1.4 million tons their highest for this time of the year and the highest since October 2017. We wouldn’t be surprised to see arbitrage flows happening.
The June 180 cst crack has improved to -$ 3.70 / bbl. The visco spread has dropped to $ 1.70/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The June 180 cSt-Dubai crack has really strengthened over the past week improving by over $ 2/bbl. We will be monitoring this closely and would look to hedge should the crack get better than -$ 3.25 /bbl
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.