21 Jul 2017
Crude Oil

It was a choppy trading session yesterday which first saw crude touch six week highs and then fall to close lower. Brent settled down 40 cents at $49.30 /bbl while WTI settled down 33 cents to $46.79 /bbl.
Market participants seem to be convinced that the supply glut is here  to stay and that the market is unlikely to rebalance anytime soon. In such a situation, bullish developments like inventory drawdowns, slowing down of rig counts, etc are only providing a temporarily impetus to prices.
The upcoming Meeting between OPEC and its allies on July 24 therefore becomes even more relevant as the market will look for announcements on additional supply cuts to stabilize prices. Whilst there is a possibility of a cap being put on exports out of Nigeria and Libya, it is unlikely that any decision will be taken for another round of cuts at this point in time.
Naphtha

Naphtha crack has strengthened considerably as traders anticipate that in the wake of strong gasoline demand from the US, naphtha which is commonly used as a blending component for gasoline, could be used to increase production of petrol instead of being exported to Asia. Lower inflows into Asia will naturally prop up flat prices and in turn the crack

The August crack is valued at $0.30/bbl today.

Gasoline

Gasoline cracks continue to rise on the back of strong inventory drawdowns in US and now Singapore. Singapore onshore light distillates stocks, which comprise mostly gasoline and blending components for petrol are reported to have fallen 7.6 % or 965,000 barrels to a two-week low of 11.68 million barrels in the week to July 19.

The August crack has strengthened to $ 11.80 /bbl.

Distillates

Inventory drawdowns in the US and Singapore have also supported distillate cracks. Singapore onshore gasoil and jet fuel stocks are reported to have fallen 6.2 %, or 725,000 barrels, to a three-week low of 10.994 million barrels in the week ended July 19.

The August gasoil crack is stronger at $ 13.10 /bbl. However, the regrade has fallen to -$0.50 / bbl today.

Fuel Oil

Fuel Oil cracks have managed to stay supported, notwithstanding large inventory build-ups in the trading hubs of Singapore and Fujairah. Singapore onshore fuel oil inventories have risen 4 percent, or 128,000 tonnes, to a one-month high of 3.4 million tonnes in the week to July 19. This happened despite a 34 percent drop in net imports to 0.5 million tonnes, the lowest since the week to April 26. Fuel oil inventories in the UAE’s Fujairah oil hub have increased by 1.354 million barrels, or 11.2 percent to 13.456 million barrels in the week to July 17, its highest since record keeping began in January earlier this year.

The 180 cst August crack is valued at -$0.50 /bbl. The visco spread is unchanged at $0.95 /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

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