Crude Oil
Crude prices gave up most of Friday’s gains on Monday. Brent fell by $1.06 to settle at $ 51.66 /bbl while WTI gave up $ 1.14 to close at $47.37 /bbl.
Traders attributed today’s price fall to profit taking. In the previous week, speculators were reported to have reduced their long positions in WTI contracts as per the CFTC.
The other major news of the week is Iraq’s plan to switch pricing of its Basra crude to DME Oman futures starting January 2018. We expect this to have two major effects viz.
- This should provide not only a fillip to the DME Oman contract, but also give it more liquidity as players seek to hedge prices there.
- This will also reduce the dependence on Platts, who has a monopoly on virtually all crude pricing and a lot of product pricing.
A lot of National Oil Companies in the Asian region have been looking for alternatives to Platts. Recently, India’s Bharat Petroleum chose to purchase some products on a formula which included Argus assessments.
Naphtha
Naphtha cracks have come off due to the recent spike in crude prices. Also, additional availability now trickling into the market are keeping a check on naphtha prices. India’s Oil & Natural Gas Corp (ONGC) sold 35,000 MT of naphtha loading from Mumbai during August 31 to September 1 at a premium of about $5.50 /MT to Middle East quotes on FOB basis. This was lower in comparison with an $8 /MT premium that ONGC had received for a July cargo sold out of Mumbai previously.
The September crack is lower at $ 1.55 /bbl
Gasoline
Gasoline cracks have also lost some ground after reports suggesting that the 1.4 MMTPA catalytic cracker at Petrochina’s Dalian refinery which was shutdown due to a fire last Thursday, is likely to restart within three weeks. Cracks had earlier risen on apprehensions that should the catalytic cracker at China’s second largest refinery be down for a long duration, gasoline availability would tighten.
The 92RON crack for September is lower today at $ 13.05/bbl
Distillates
Distillate cracks have also come off as the market is becoming oversupplied with demand not being able to keep up. India, which prior to the onset of monsoon season, was aggressively seeking diesel cargoes, is now offering export volumes. Essar Oil is learnt to have offered its third diesel cargo for September comprising 70,000 MT of 500 ppm sulphur gasoil.
The September gasoil crack is down at $ 12.35 /bbl. Regrade has improved slightly to -$ 0.35 /bbl
Fuel Oil
The Fuel Oil paper market was extremely active on Monday with five cargoes of 380 cst grade totaling 100,000 MT traded in the Platts window. Interestingly, Mercuria was the buyer of all these five cargoes bringing its total purchases this month to 320,000 MT of fuel oil. This is a sharp contrast to the volume of 40,000 MT that Mercuria bought in July. Given the depressed prices, Mercuria may be stocking up on fuel oil to encash on market opportunities at a later stage.
The 180 cst crack is valued at -$1.55 / bbl for September. The visco spread is unchanged at $ 0.80 /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