Oil prices on Monday rose to multi-week highs before easing later in the session as OPEC indicated it was likely to maintain production cuts that have helped boost prices this year. Brent crude futures settled at $71.97 a barrel, down cents from Monday’s settle. WTI crude futures settled at $63.10 a barrel, gaining 34 cents.
Both contracts hit multi week highs during the day as Saudi Energy Minister Khalid al-Falih said on Sunday there was consensus among the OPEC+ group to drive down crude inventories “gently” but he would remain responsive to the needs of what he called a fragile market. Brent futures touched $73.40, their highest since April 26 while WTI hit $63.81, the highest price since May 1.
President Donald Trump warned on Monday Iran would be met with “great force” if it attacked U.S. interests in the Middle East, and government sources said Washington strongly suspects Shi’ite militias with ties to Tehran were behind a rocket attack in Baghdad’s Green Zone.
OPEC data indicated oil inventories in the developed world rose by 3.3 million barrels month-on-month in March, and were 22.8 million barrels above their five-year average.
Hedge funds continued to liquidate some of their bullish position in oil last week as concerns about the economy and the outlook for consumption outweighed escalating tensions and the threat to supplies in the Middle East. Fund managers have now cut their net long position for three weeks running, by a total of 61 million barrels, after raising it 609 million barrels over the previous 15 weeks since Jan. 8
Asia’s naphtha crack eased to a two-session low of $34.63 a tonne on Friday
Spot naphtha demand was mostly muted as buyers have yet to emerge to replenish stocks for July delivery, but South Korea’s YNCC and Lotte Chemical were seeking naphtha through a 12-month contract starting August. Lotte Chemical sealed the deal at a premium of about $1.50 a tonne to Japan quotes on a cost-and-freight (C&F) basis, sharply lower than the $6 to $7 a tonne premium it paid for a July 2018 to June 2019 contract.
The June crack is much lower at – $7.00 /bbl;
Asia’s gasoline crack jumped more than 20 percent to reach a nearly two-week high of $5.95 a barrel, supported by demand in Europe.
Gasoline stocks in ARA fell 72 KT to reach a 8-1/2 month low of 802 KT in the week to Thursday, data from Dutch consultancy Insights Global showed.
Refinery trouble in Germany had led to at least one cargo of gasoline from ARA being shipped to the former in a rare move. Total’s 230,000 barrel-per-day (bpd) Leuna refinery in Germany has declared force majeure on refined product shipments as a result of the contamination of Russian Urals crude.
The lower inventories in ARA came in the same week where data showed that gasoline stockpiles in Singapore and the U.S. were also down. These heavy drawdown on gasoline stocks had offset new export quotas from China which showed that allocation for gasoline has nearly doubled versus the first batch of export quota issued in December.
The June crack is lower at 5.75 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s 10ppm gasoline margin extended gains to hover at more than a two-month high above $15 a barrel for the second session on Friday, supported by lower inventories in Singapore.
Gasoil deals in the Singapore cash market resumed after a one week’s absence. China has issued a second batch of refined fuel export quotas for 2019 that is 30 percent higher than the first batch. The new quota is now at 23.79 million tonnes, of which 9.175 million tonnes is diesel.
ARA gasoil inventories rose 22 KT to 2.65 million tonnes last week.
The June crack for 500 ppm Gasoil is lower at $ 14.20 /bbl with the 10 ppm crack at 15.60 / bbl. The regrade is at -$ 0.15 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Expectations of increasing seasonal summer demand improved sentiment in Asia’s fuel oil market.
Cash discounts for 380-cst HSFO were at minus 44 cents a tonne to Singapore quotes, compared with minus 85 cents per tonne in the previous session. This is its narrowest discount since April 30. 380-cst cash differentials have climbed for six sessions straight and were at $1.36 per tonne on Monday.
The June/July 380-cst time spread was also higher on Friday, trading at about $2.75 per tonne. The front-month time spread was at $2 per tonne in the previous session, according to Refinitiv data in Eikon.
Meanwhile, official storage data released showed fuel oil inventories in the ARA oil hub in Europe increased this week by 294 KT to 1.148 KT
The June180 cst crack is higher at – $ 2.85 / bbl with the visco spread at $ 2.00 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Gasoil cracks are have eased in the prompt and collapsed for Calendar 2020. FO cracks have once again commenced climbing.
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.