Crude Oil
Oil prices fell on Thursday as investors’ concerns returned to the impact an escalating trade row between China and the United States will have on oil demand growth and data showing ample supplies. Brent crude futures settled 76 cents lower $79.29 a barrel. WTI crude lost $1.10 to settle at $68.65 a barrel.
This is the first time Brent has settled under $ 80 / bbl since 24th September. WTI too settled at its lowest in a month.
Currently, the US is caught in a quandary of its own making. It has been threatening virtually every major oil supplier in the world with sanctions if they don’t act in line with US expectations. Clearly they cannot apply sanctions to all of them since that will send prices of oil through the roof, something that the US is equally clear they don’t want. How they resolve this is going to be a matter of some interest.
Naphtha
Asia’s naphtha crack fell to over a 3-1/2 month low of $74.55 a tonne due to ample supplies.
Spot prices remained under pressure with South Korea’s YNCC having bought naphtha for first-half December arrival at Yeosu at a discount deeper than $4 but narrower than $5 a tonne to Japan quotes on a cost-and-freight (C&F) basis.
The November crack has fallen to – $ 2.55 / bbl
Gasoline
Asia’s gasoline fell for the fourth straight day on Thursday and slumped to its lowest in over two years on high stockpiles. The gasoline crack hit $3.04 a barrel, making this the lowest level since Aug. 1 2016. The drawdown of gasoline stocks in the United States was not enough to counter mounting supplies in Asia.
Singapore’s onshore light distillates stocks jumped by 10.7 percent, or 1 million barrels, to reach a two-week high of 11.1 million barrels. Although the current stockpiles in Singapore were lower than inventories from a year ago, the outlook was not optimistic because of overall slower demand in Europe and in parts of Asia. European gasoline crack was near a five-year low on Tuesday.
The November crack is lower at $ 4.65 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s 10ppm gasoil cash premiums to Singapore benchmark prices continued their ascent on Thursday, climbing to a new record high of $1.56 a barrel to Singapore quotes on Thursday, up from $1.37 a barrel in the previous session.
Sentiment in Asia’s gasoil market has been boosted by a tightening supply outlook amid recent refinery maintenance and outages coupled with firm demand for the middle distillate fuel. The reconfiguration of some refiners in Asia to produce more kerosene, at the expense of gasoil output, ahead of seasonal winter demand for heating was also seen weighing on near-term gasoil supplies.
Singapore onshore gasoil and jet fuel stocks fell to an eight-week low of 9.19 million barrels in the week to Oct. 17, down 903,000 barrels, or 9 percent from the previous week. Compared with a year ago, this week’s inventories were 8 percent lower.
Since the start of the year, Singapore middle distillate inventories have averaged 9.381 million barrels a week, compared with a weekly average of 11.963 million barrels in 2017.
The November crack is higher at $ 16.30 /bbl with the 10 ppm crack at $ 17.10 /bbl. The regrade is higher at $ 0.55 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for cargoes of Asia’s mainstay 380-cst high-sulphur fuel oil slipped on Thursday, falling away from a more than two-month high in the previous session amid lower deal values in the Singapore trading window.
Sentiment was still supported by the relatively tight availability of near-term supplies in Singapore which are weighed down by limited arbitrage flows into the city-state this month.
Singapore fuel oil inventories fell 5 percent, or 946,000 barrels, to 17.707 million barrels. Net fuel oil imports were at a four-week low of 648,000 tonnes, down 47 percent from the week before and below the 2018 average net import volume of 791,000 tonnes per week. This week’s onshore fuel oil inventories were 27 percent lower than a year ago.
The Wall Street Journal reported that the Trump administration is aiming to slow the rollout of IMO2020. A White House spokesman said they were not looking to withdraw from the agreement, but believed the shipping and energy markets would face less disruption if the rules were phased in in the name of experience building.
The November 180 cst crack has flipped into positive territory at $ 0.05 / bbl with the visco spread at $ 1.20 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Fuel Oil continues to grow in strength. The crack for November has flipped into positive territory a settle that happened only once in the last 12 years and more. We will add one more tranche at this level and then see how it settles out.
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.