Crude Oil
Oil soared more than 5% on Thursday after Iran shot down a U.S. military drone, raising fears of a military confrontation between Tehran and Washington. Brent crude futures rose $ 2.63 to settle at $64.45 a barrel. WTI crude futures rose $ 2.89 to settle at $56.65 a barrel.
Expectations that the U.S. Federal Reserve could cut interest rates at its next meeting also supported prices. Brent’s premium over WTI narrowed to its lowest since April.
U.S. President Donald Trump played down Iran’s downing of a U.S. military drone, saying he suspected it was shot by mistake and that “it would have made a big difference” to him if the remotely controlled aircraft had been piloted. While the comments appeared to suggest Trump was not eager to escalate the latest in a series of incidents with Iran, he also warned that: “This country will not stand for it.”
Tehran said the unarmed Global Hawk surveillance drone was on a spy mission over its territory but Washington said it was shot down over international airspace.
Gulf OPEC producers will keep their July oil production within their OPEC target despite the current global supply cut pact expiring at end of June, OPEC sources said on Thursday. This is a clear signal that the Gulf exporters are reluctant to boost supply. The moves indicate that the powerful Gulf oil producers block wants to keep the existing output cut by OPEC unchanged for the second half of the year.
Naphtha
Asia’s naphtha crack extended gains on Thursday for a third straight session to reach a month’s high of $24.70, supported by robust demand.
At least three buyers were seeking spot cargoes, with Japan Mitsubishi Chemical and YNCC securing cargoes for first half August delivery. Mitsubishi Chemical paid prices within the range within parity to slight premium a tonne to Japan quotes on a C&F basis, while YNCC paid a slight discount.
The Japanese buyer had earlier picked up spot naphtha. Other than spot demand, Malaysia based Titan and Chinese owned CNOOC were looking to lock in naphtha through 12 month contracts. Titan was seeking cargoes for October 2019 to September 2020 arrival at Pasir Gudang while CNOOC was looking to buy naphtha for September 2019 to August 2020 delivery.
The July crack is lower at -$ 6.05 /bbl
Gasoline
No fresh news on the gasoline markets. Light Distillate stocks in Singapore rose by over 182 kb to 12.49 million barrels in the week ending 19th June, a 7 week high, data from Enterprise Singapore showed.
The July crack is lower at $ 4.75 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil flipped back to a premium of 2 cents a barrel to Singapore quotes, compared with a narrow discount of 1 cent per barrel on Wednesday.
Cash differentials for jet fuel were at a discount of 15 cents a barrel to Singapore quotes on Thursday, compared with a discount of 10 cents per barrel a day earlier.
The front month time spread for jet fuel traded at a discount of 10 cents per barrel on Thursday, compared with 7 cents on Wednesday. The spread, however, has narrowed its contango structure by more than 60% over the last two weeks.
Middle distillate stocks in Singapore fell by 207 KB to 10.32 million barrels in the week ending 19th June, data from Enterprise Singapore showed. This is a five week low.
The July crack for 500 ppm Gasoil is unchanged at $ 14.15 /bbl with the 10 ppm crack at $ 14.85 / bbl. The regrade is at +$ 0.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front month 380 cst high sulphur fuel oil (HSFO) barge crack held firm on Thursday despite sharp gains in benchmark crude prices.
The July 380 cst barge crack was at $8.16 a barrel below Brent crude, down 7 cents a barrel from the previous session.
Meanwhile, Singapore fuel oil inventories slipped to a two week low, in the week ended June 19, as net imports of the fuel plunged 68% from prior week.
The July180 cst crack is lower at – $ 1.70 / bbl with the visco spread at $ 1.60 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No Fresh action for today.
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.
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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.