Crude Oil
Oil prices eased on Thursday, pulling back after U.S. President Donald Trump urged OPEC to increase production at its meeting in Algeria. Brent crude futures fell 70 cents to settle at $78.70 a barrel, WTI crude futures fell 32 cents to settle at $70.80 a barrel.
OPEC and other producers, including Russia, meet on Sunday in Algeria to discuss how to allocate supply increases to offset the loss of Iranian barrels. The meeting is unlikely to agree to an official rise in crude output, although pressure is mounting to prevent a spike in prices. Trump weighed into the debate via Twitter, saying, “The OPEC monopoly must get prices down now!” “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember,” Trump tweeted.
In the range-bound market, Trump’s tweets may drive prices down slightly, and such tweets from the president would probably continue with the U.S. midterm elections fast approaching. Still, markets expect Brent to move above $80 soon.
Naphtha
Asia’s naphtha crack eased for the second day, this time by 0.1 percent to reach a three-session low of $96.20 a tonne on Thursday as high supplies dragged.
The October crack is steady at -$ 0.15 /bbl
Gasoline
Asia’s gasoline crack was also down, touching a 1-1/2 week low of $8.36 a barrel.
Singapore’s onshore light distillates inventories, which comprise mostly gasoline and blending components for petrol, rose 9.4 percent or nearly 1.1 million barrels to reach a two-week high of 12.43 million barrels in the week to Sept. 19. Gasoline inventories in Japan was also up, having risen by 690,000 barrels to 10.48 million barrels in the week to Sept. 15.
The October crack has improved to $ 9.80 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for 10ppm gasoil climbed for the third consecutive session on Thursday to 82 cents a barrel above Singapore quotes, a new peak for this year.
There is quite a steady demand for gasoil in Asia at present, but the price spread between east and west was making it unworkable to ship cargoes from east to west. The exchange of futures for swaps (EFS) were about minus $6.70 a tonne on Thursday from minus $7.52 a tonne from the previous session, Reuters data showed. Arbitrage is usually profitable when the EFS trades at about minus $15 a tonne and below.
Meanwhile, cash discounts for jet fuel narrowed to 6 cents a barrel to Singapore quotes on Thursday, from a discount of 8 cents a barrel on Wednesday.
China’s diesel demand will grow at its fastest in at least five years as a pick-up in diesel-intensive sectors in the world’s second-biggest economy coincides with lower output from domestic refineries. Diesel accounts for about 30 percent of China’s appetite for petroleum products and is typically used to fuel trucks, as well as mining and construction equipment. The slight pick-up in Chinese demand helped to boost Asian diesel margins to their highest in more than three years earlier this month.
Singapore onshore middle distillate stocks climbed 2.1 percent in the week to Sept. 19 to 9.5 million barrels. Since the start of the year, Singapore middle distillate inventories have averaged 9.3 million barrels a week, compared with a weekly average of about 12 million barrels in 2017. Overall, onshore middle distillate inventories were about 15 percent lower than a year ago. .
The October crack is higher at $ 15.35 / bbl with the 10 ppm crack at $ 16.15 /bbl. The regrade has dropped to -$ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Expectations of tighter supplies saw Asia’s 380-cst time-spreads, from October/November through to January/February 2019, firm on Thursday amid active trade.
Lower fuel oil output as a result of refinery upgrades and turnarounds, couple with firm demand, are expected to weigh on fuel oil arbitrage flows into Asia from October. Renewed U.S. sanctions on Iranian oil products are also contributing to lower fuel oil supplies.
Meanwhile, shrinking net imports of fuel oil into Singapore, in the week ended Sept. 19, pulled down overall fuel inventories by 4 percent to a two-week low of 15.288 million barrels. Inventories were down 655 KB from the previous week. and 38 percent lower than a year ago.
The October 180 cst crack is higher at -$ 4.25 / bbl with the visco spread at $ 1.05 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to report 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.