Although Crude Oil prices rose last Friday with Brent settling 45 cents higher at $47.37 /bbl and WTI settling 28 cents lower at $44.74 /bbl, the outlook remains bearish. As of this morning both Brent and WTI futures are down 11 cents each. More significantly, prices for both benchmarks are down by almost 13 percent since late May, when OPEC announced extension of its production cuts.
According to Baker Hughes, US rig count rose by 6 for the week ended 16-June-17 to touch 933. This is now the 22nd consecutive week of additions with the rig count more than double that of last year. There is also talk in the market that supplies from within OPEC and other countries officially participating in the cuts, like Russia, remain high as some countries have not fully complied with their pledges. On the consumption side, there are rising concerns that demand growth in Asia, the world’s biggest oil consuming region, is stalling. This is evidenced by lower importers in May last month by key Asian countries like China, India and Japan.
In the absence of any fresh bullish news, the prices are expected to remain under pressure.
The naphtha market is witnessing strong demand with several players in the market looking for cargoes. South Korea’s LG Chem and SK Energy were heard to be seeking naphtha for July and August deliveries respectively, shortly after YNCC, Hanwha and Malaysia-based Titan concluded their purchases. Cracks however remain unchanged as as healthy demand is being offset by expectations of high supplies.
The July crack stays at -$0.70 /bbl
Gasoline cracks continue to improve encouraged by falling stock levels in both Europe and Singapore. Gasoline stocks held independently in the storage hub of Amsterdam-Rotterdam-Antwerp (ARA) slipped 0.2 percent or to 890,000 tonnes in the week to June 15, making this the lowest weekly volume since March 23.
The July crack is up at $ 9.80 /bbl
Distillate markets continue to strengthen on the back of strong demand especially out of India whose diesel imports this year are likely to rise to the highest level since at least 2011 as refiners are taking shutdowns in several of their refineries to upgrade units to meet new fuel standards. Also, warmer temperatures are spurring demand.
The July crack is at $ 11.00 /bbl with the July regrade now at -$ 0.30/bbl
The Fuel Oil market is witnessing strong demand balanced by increasing supplies and high stocks. Mercuria and Petrochina which were holding huge inventories in floating storage are now offering cargoes in the market to cash in on strong fuel oil demand from shipping and power sectors. This has already brought the number of tankers storing fuel oil down to three or four compared to an initial eight or nine.
Fuel oil stocks held independently at the Amsterdam-Rotterdam-Antwerp (ARA) storage hub surged 67 percent or 380,000 tonnes to a three-week high of 948,000 tonnes
The The July crack is unchanged at -$0.40 /bbl with the visco spread at -$1.90 /bbl
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.