The uncertainty in oil prices continued to affect the markets, but this was expressed more in the WTI- Brent Spread rather than flat price per se. Brent crude futures settled 34 cents lower at $ 74.74/ bbl. The expiring WTI future settled $ 1.15 higher at $ 66.22. The August future settled at $ 65.71 /bbl.
Brent’s fall can be attributed to the uncertainty regarding OPEC output while the US rise was more a result of supportive data issued by the DOE.
Libya says it hopes to divert some of its stranded crude to other oil terminals after attacks on Ras Lanuf and Es Sider. The NOC chairman confirmed Libya lost about 450kbd of production due to the attacks, and another “huge quantity” from the AGOCO fields due to technical issues. The most likely alternatives appear to be the nearby Brega and Zueitina terminals for now.
On the OPEC meeting, Iran’s oil minister appeared to soften his stance on OPEC’s potential decision to increase output, saying he “cannot reject” the proposal as the cartel had settled on “100% compliance, not more”. Iran previously was one of the biggest opponents to any increment and had threatened to veto the deal. Ecuador’s oil minister now says an output hike of around 600 kb/d is the most likely. The minister previously made news for saying that proposals for increments of up to 1.5 mb/d would be discussed at the OPEC meeting in Vienna.
The DOE reported significant draws in crude stocks as refineries cranked up run rates to record highs for this time of the year at 96.7%. However, demand figures were disappointing leading to significant stock builds and damping the effect of the crude draws.
In addition to the increase in consumption, an increase in exports seems to have affected crude stocks though the material balance suggests that crude stocks should not have depleted as much as they did.
Product demand dropped by over 550 kb/d which is particularly disappointing for gasoline as we approach the heart of the driving season. However, the build in stocks seems to have been over reported for gasoline, but under reported for distillates.
Distillate stocks continue to remain at seasonal lows as the US appears to be taking over the slack from the shutdown of Venezuelan refineries.
Click Here for analytical charts on the DOE data
Lights Asia’s open-specification naphtha crack to Brent oil hovered around a two-month low of $68.63 a tonne on Wednesday as firm crude prices and expectations of more supply of the fuel next month weighed. Demand for heavy full-range naphtha from South Korea in the meantime as an alternative to condensates was expected to hold firm as the fuel remained more workable in terms of prices.
The July crack is lower at -$2.25 / bbl
Asia’s gasoline crack to Brent oil continued to plummet to $3.60 a barrel even though stocks in both Japan and Fujairah receded.
Stocks in Fujairah fell by 813 KB to a three week low of 6.05 million barrels. Stocks in Japan also eased marginally by 100 kb to 10.96 million barrels. However, the impact of stocks in the US rising dramatically in the middle of the driving season is bound to impact the market.
The July crack has plunged to $ 7.30 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asian refining margins for 10ppm gasoil slipped on Wednesday due to gains in crude oil prices and as regional refineries undergoing seasonal turnarounds started returning from maintenance.
Cash premiums for gasoil with 10ppm sulphur content climbed to 18 cents a barrel to Singapore quotes, compared with 16 cents on Tuesday.
Meanwhile, cash differentials for jet fuel narrowed on Wednesday and were at a discount of 28 cents a barrel to Singapore quotes, compared with 29 cents a day earlier.
Middle distillates inventories in the Fujairah Oil Industry Zone (FOIZ) rose to their highest in two and a half months, data via S&P Global Platts showed. Stocks for middle distillate products climbed 1.6 percent from a week ago to 2.74 million barrels in the week ended June 18. Compared with year-ago levels, Fujairah middle distillate inventories were about 23 percent lower.
The July crack is lower at $ 13.30 / bbl with the 10 ppm crack at $ 14.20 /bbl. The regrade is steady at $ 1.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 180-cst fuel oil crack at a discount of $5.41 a barrel on Wednesday reflected the narrowest discount in two weeks as stronger fundamentals could have countered the high oil prices which typically weighs on oil products margins.
Fujairah fuel oil stocks in the week ended June 18 for instance fell by 861 KB to about 8.9 million barrels, official data showed. The latest data marked a 24 percent drop in inventories when compared to the same period last year.
Supplies were also seen lower. Overall, East Asia is expected to receive les than 6 million tonnes of fuel oil in June, down from a six-month high in May at up to 6.7 million tonnes. The lower incoming volumes were due largely to fewer cargoes coming to Asia from the West.
The July 180 cst crack is stronger at -$ 2.50 / bbl. The visco spread is at $ 1.75 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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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.