Oil prices rose on Wednesday after U.S. government data indicated bullish demand for gasoline and distillates, which overshadowed a surprise build in U.S. crude inventories Brent crude futures rose 74 cents to settle at $72.90 a barrel, after hitting a session low of $71.19 a barrel. WTI crude futures rose 68 cents to settle at $68.76 a barrel..
Monday’s fall was triggered by the indroduction of a “NOPEC” legislation by the US which would allow the US Justice Department to sue OPEC for antitrust violations.
At a meeting held by OPEC countries in Vienna, OPEC was said to be evaluating its legal options to counter the legislation. It reported that compliance was 126% in June and reiterated its commitment to 100% compliance.
In the meanwhile, Iran filed a lawsuit against the US in the International Court of Justice, claiming the US violated a 63-year treaty by exiting the Iran nuclear deal.
Japan reported a 17% drop in crude imports year on year to 2.28 mb/d. This is its lowest monthly volume since April 1991
The DOE reported a surprisingly large build in crude coupled with draws in products in its report yesterday.
The build in crude was due to a return of imports to a two year high of over 9 mb/d, a reduction in exports as well as a reduction in run rates. Crude production finally moved up to touch the expected figure of 11 mb/d.
Product draws were a combination of lesser production and, more bullishly, strong demand in both gasoline and distillates.
Our material balance statement suggests that the crude build as well as the distillate draw may have been a bit understated.
Click here for detailed charts of US stocks
Asia’s naphtha crack recovered 1.84 percent to reach a two-session high of $94 a tonne on Wed nesday, supported by recent demand and expectations of slightly lower cargoes arriving next month from the West. Naphtha arrivals in July were estimated at 1.2 million-1.3 million tonnes. The market expects cargoes arriving in August to be slightly lower although the final numbers could change as there is still time to charter ships..
The August crack, has improved to -$ 0.75 /bbl
Asia’s gasoline crack was at a five-session low of $5.50 a barrel after it hit its highest in nearly a month at over $6 on Monday as high supplies capped gains.
China’s gasoline output was up 4.9 percent in June from a year ago at 11.43 million tonnes. South Korean refiner S-Oil’s new residue fluid catalytic cracker (RFCC) unit at its 669,000-barrel-per-day plant in Ulsan is mechanically completed and is on a test run. The unit can produce 21,000 barrels per day of gasoline.
Light distillates inventories in the Fujairah Oil Industry Zone (FOIZ) rose 5 % from a week ago to 7.3 million barrels in the week ended July 16. Compared with a year-ago levels, this weeks levels were about 20% higher.
The August crack is nevertheless higher at $ 8.55 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash discounts for 10ppm gasoil widened for a fourth consecutive session on Wednesday, staying near the weakest levels for this year, as excess supply continued to weigh on the market.
Cash discounts for gasoil with 10ppm sulphur content were at 23 cents a barrel to Singapore quotes, compared with a discount of 21 cents on Tuesday.
China has exported about 8.5 million tonnes of diesel between January and May — 27 percent higher than the exports over the same period last year.
Meanwhile, cash discounts for jet fuel widened to 3 cents a barrel to Singapore quotes, lowest since July 6. The differentials were at a discount of 1 cent a barrel on Tuesday.
Middle distillates inventories in the Fujairah Oil Industry Zone (FOIZ) rose 3.2 % from a week ago to 3.01 million barrels in the week ended July 16. Compared with a year-ago levels, stocks were about 27 percent lower.
The August crack is higher at $ 13.40 / bbl with the 10 ppm crack at $ 14.30 /bbl. The regrade is higher at $ 1.30 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
The front-month fuel oil crack widened its discount to Brent crude on Wednesday, slipping further away from recent highs despite sharp declines in crude oil prices over the past week. The August 380-cst barge crack to Brent crude was trading at about minus $8.70 a barrel on Wednesday, down from about minus $8.45 a barrel in the previous session.
Fuel oil inventories at the Fujairah Oil Industry Zone (FOIZ) slipped 1.2 percent to a two-week low of 9.8 million barrels in the week ended July 16. Compared with the same time last year, however, Fujairah fuel oil inventories were 27 percent lower.
The August 180 cst crack has improved to -$ 1.80 / bbl with the visco spread at $ 1.40 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Nothing fresh to report. Our eye is on the 3Q 2019 Naptha Dubai crack which is quoting at levels similar to the 2Q 2019 crack. At the level of our hedge there or better, we may recommend buying into that crack as well.
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.