Crude prices rallied dramatically in the last hour of trading to close at surprise highs for the week. Brent rose $1.72 cents to settle at $ 52.85 /bbl while WTI rose by $ 1.42 to $48.51 /bbl.
The immediate reason for this response was reports of a unit being shut down at Exxon’s refinery in Baytown, Texas. This refinery which has a total nameplate capacity of 546 kbpd is the second-largest refinery in the U.S. Later on, it was probably bolstered by the Baker Hughes report of a reduction of 5 rigs to a total of 763 rigs.
We have not had an opportunity to evaluate the impact of this shutdown, but we expect that we should see a correction downward from this number in the immediate pending no fresh news.
The weekly trend for the futures was mixed. While Brent ended the week 62 cents higher, WTI closed the week 38 cents lower. This could be due to the impending expiry of the front month September future on Tuesday. Another reason for the widening of the Brent WTI spread over the last week is the reported tightness in the Brent physical market. Brent futures are well backwardated over the next few months whereas the same is not visible in WTI.
Both, the daily as well as the weekly charts show strong bullish features.
The daily chart shows prices bouncing off the bottom of the rising channel to shatter through both, the 100 DMA as well as the 200 DMA with two strong bulling candles. The oscillators have changed direction upwards in the daily charts.
Similarly, the weekly chart shows prices bouncing from the 50 WMA to still hover around the top of the rising channel of prices.
Supports would lie at $ 52.05, the 200 DMA, $ 51.59 (50 WMA) and $ 50.60 (100 DMA). Resistances would lie at $ 52.85, $ 53.63 and $ 54.67, all previous highs. Of these we expect the $ 53.65 area to act as a particularly strong resistance.
Sustained interest from buyers in the physical markets is keeping naptha cracks supported. Recently, South Korea’s YNCC was understood to have bought three naphtha cargoes totaling 75,000 MT for first-half October arrival at Yeosu.
The September crack is unchanged at $ 1.85 /bbl
Although valued lower today, Gasoline cracks are likely to stay supported due to fresh spot demand from Indonesia and apprehensions of gasoline supplies being dented due to a fire that broke out last Thursday at the 1.4 MMTPA catalytic cracker (a unit that typically produces gasoline) at Petrochina’s Dalian refinery, one of China’s largest refineries.
Pertamina, Asia’s top gasoline importer, has floated a tender to procure six cargoes of 88-octane gasoline totaling 760,000 bbls for lifting in September from Singapore/Malaysia.
The 92RON crack for September is lower today at $ 13.15/bbl
Distillate cracks continue to slide as high inventories across major hubs and surplus supplies weigh on prices.
The September gasoil crack is down at $ 13.00 /bbl. Regrade has worsened to -$ 0.45 /bbl
A steady build up of inventories across key trading hubs in Europe, Middle East and Far East are keeping a cap on fuel oil prices. Fuel oil stocks at the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose 6% or 48,000 MT, to a total of 847,000 MT in the week to August 17. This is in addition to the stock increase at Fujairah and Singapore reported in our Oil Price Digest of last Friday.
The 180 cst crack is valued at -$1.50 / bbl for September. The visco spread is at $ 0.80 /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.
Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity