Crude Oil Futures rose on Monday after weeks of decline as Markets grew more concerned about an expected fall in supply from Iran due to US sanctions and worried less that a trade war between US and China would hurt economic growth. Brent crude futures rose 28 cents to settle at $72.21 a barrel. WTI futures rose 52 cents to end at $66.43 a barrel.
On Monday, Iran asked the European Union to speed up efforts to save a 2015 nuclear deal between Tehran and major powers. Most EU companies have pulled out of Iran for fear of US sanctions.
Tehran also said that France’s Total had officially exited Iran’s South Pars gas project.
China signalled it wanted to continue buying large volumes of Iranian oil despite US pressure and was now switching to Iranian tankers to skirt US sanctions on ship insurers.
The U.S. Department of Energy (DOE) is offering 11 million barrels of sour crude for sale from the nation’s Strategic Petroleum Reserve (SPR) ahead of the sanctions on Iran.
Elsewhere, Saudi Arabia’s crude exports rose to 7.24 million barrels per day in June.
North Sea output of upto 70 kbpd has been shut due to an ongoing strike by trade unions in the region.
Asia’s naphtha crack fell for a third straight session to hit a one-month low of $97.95 a tonne on Monday, dragged down by expectations of higher supplies but slower demand. Higher cargoes were expected to arrive in Asia in September versus August but demand for naphtha feedstock is set to fall as crackers in Japan and South Korea have planned maintenance outages.
The September crack is lower at -$ 0.15 /bbl
Asia’s gasoline crack hit a two-week low of $8.51 a barrel as high supplies brought the value down from a near 11-month high of $11.55 on Aug. 15 after gasoline supplies were disrupted in India. China’s gasoline production has remained high while stockpiles in Singapore were not low although no longer at record high levels.
The September crack is higher at $ 9.95 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash premiums for 10ppm gasoil edged higher on Monday and hit their highest in over two months amid weaker inventory levels and expectations for growing demand over the next few weeks.
Cash premiums for 10ppm gasoil were at 26 cents a barrel to Singapore quotes, the highest since early-June. The cash differentials were at a premium of 25 cents a barrel on Friday.
Meanwhile, cash differentials for jet fuel slipped to deeper discount on Monday to 16 cents a barrel to Singapore quotes, compared with 13 cents per barrel on Friday. The front-month spread flipped into contango, and the physical market in the Singapore window remained muted with no deals.
The September crack is however lower at $ 15.00 / bbl with the 10 ppm crack at $ 15.90 /bbl. The regrade is at $ 0.10 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash premiums of Asia’s mainstay 380-cst high sulphur fuel oil slipped to a five-week low on Monday, dented by weaker deal values in the Singapore trading window albeit limited activity.
The 380-cst cash premiums were at $5.42 a tonne to Singapore quotes on Monday, down from $5.86 a tonne on Friday and $5.92 a tonne in the week before.
In an unusual arbitrage move, Shell International Eastern Trading Company (SIETCO) has chartered a tanker to ship up to 80,000 tonnes of slurry oil from Singapore to Ruwais in the United Arab Emirates (UAE).
The September180 cst crack is lower at -$ 2.65 / bbl with the visco spread at $ 1.35 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We continue to remain within touching distance of our target of $ 18.00 /bbl for Jet. There is a temptation to hedge even at these levels which are extraordinarily high, but a risk management program is necessarily disciplined.
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.