Crude Oil
Oil prices rose about 1 percent on Friday supported by rising tensions between the United States and Iran. Brent crude futures settled 54 cents higher at $62.47 a barrel. WTI crude futures rose 33 cents to end the session at $55.63 a barrel.
For the week, WTI dropped 7% for the week and Brent lost about 5.5% for the week, the steepest losses for both benchmarks since late May.
Prices gained late in the session after Iran’s Revolutionary Guards said they had captured a British-flagged oil tanker in the Gulf. Britain has asked its ships to stay out of the Straits of Hormuz Area. A senior Trump administration official said on Friday the United States will destroy any Iranian drones that fly too close to its ships.
Prices were also buoyed Friday by indications the U.S. Federal Reserve will interest cut rates aggressively to support the economy.
U.S. energy firms this week reduced the number of oil rigs operating for a third week in a row as drillers follow through on plans to cut spending. Drillers cut five oil rigs in the week to July 19, bringing the total count down to 779, the lowest since February 2018.
Data on Friday also showed hedge funds and other money managers raised their bullish wagers on U.S. crude. It was the second consecutive increase.
More China easing is expected as growth cools and trade war weighs on the economy. Policymakers looking for signs earlier measures are kicking in as previous stimulus adding to rising debt. More fiscal spending, liquidity injections are expected while benchmark rate cuts are only to be used as a last resort
Naphtha
Asia’s naphtha crack for first-half September ended the week at a four-session high of $31.60 a tonne, as feedstock crude oil prices eased.
Having said that, spot demand for naphtha this week has remained mostly muted and purchase tenders for first-half September cargoes delivery have yet to be seen. Buyers were either holding back purchases in view of falling crude prices or had term cargoes to tie them over temporarily.
The August crack is lower at -$ 5.45 /bbl
Gasoline
Asia’s gasoline crack rose to $8.28 a barrel, highest since Monday, supported by tighter supplies following production cuts.
Gasoline stocks at the ARA storage hub surged 131 KT in the week to Thursday to hit a three-week high of 1.23 million tonnes.
The August crack is lower at $ 7.90 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil rose on Friday, to their highest levels in more than eight months, buoyed by steady buying interest in the physical market. They were at a premium of 22 cents a barrel to Singapore quotes on Friday, 2 cents higher from the previous session.
Gasoil stocks in ARA rose by 155 KT to 2.97 million tonnes in the week to 18th July.
Cash premiums for jet fuel were at 15 cents a barrel to Singapore quotes, compared with a 12-cent premium on Thursday.
The August crack for 500 ppm Gasoil is higher at $ 16.20 /bbl with the 10 ppm crack at $ 16.80 / bbl. The regrade is at +$ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for Asia’s 380-cst high-sulphur fuel oil extended gains for a third session on Friday despite an absence of activity in the Singapore trading window.
The 380-cst HSFO cash premium climbed to $23.30 a tonne to Singapore quotes, up from $21.77 a tonne in the previous session.
Fuel stocks in ARA rose 9% to a two-week high of 1.129 million tonnes in the week ended July 18. ARA fuel oil inventories, however, were 17% lower than a year ago but above the five-year average of 1.054 million tonnes for this time of the year.
The August 180 cst crack has strengthened further to + $ 2.60 / bbl with the visco spread at $ 1.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity for today even as FO cracks surge. We may hedge FO crack August above $ 3.00 /bbl or September above $ -1.00 /bbl.
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.