Crude Oil
Brent crude fell more than 2 percent on Thursday ahead of a meeting of the Organization of the Petroleum Exporting Countries, where producers were expected to boost output to stabilise prices. Brent crude fell $1.69 to settle at $73.05 a barrel. U.S. West Texas Intermediate crude for August delivery, the new front month, fell 17 cents to $65.54 a barrel, and was down 68 cents from the July contract’s expiry on Wednesday at $66.22.
OPEC, however, was struggling to agree on raising output, with Saudi Arabia warning of supply shortages and price rallies but Iran holding out against a deal at the group’s meeting on Friday. Iranian Oil Minister Bijan Zanganeh said he still believes OPEC cannot reach a compromise decision.
Front-month WTI surged to trade as much as 71 cents a barrel over the second month , the biggest premium since October 2014. The rise came as the July contract expired on Wednesday and as stockpiles in Cushing declined by 2.3 million barrels last week.
Naphtha
Asia’s naphtha crack recovered slightly from a two-month low to a two-session high of $71.75 a tonne on Thursday as Brent crude prices fell but naphtha fundamentals were under pressure as more supplies were expected. This has eroded premiums, which are now at around $ 5/MT over C&F Japan quotes.
The July crack has recovered to -$2.00 / bbl
Gasoline
Asia’s gasoline crack similarly recovered from a 22-month low to a two-session high of $4.15 a barrel but it has lost 44 percent of its value when compared to the start of the year due to ample supplies.
Singapore’s onshore light distillates stocks fell by about 4.5 percent or 563,000 barrels to reach its lowest in about 6-1/2 months of around 12.1 million barrels in the week ended Wednesday,.
The July crack has recovered strongly to $ 7.90 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s refining margins for 10ppm gasoil fell on Thursday to their lowest in over three months, while cash premiums slipped amid increasing supplies as middle distillate inventories in Singapore climbed to their highest in nine weeks.
Cash premiums for gasoil with 10ppm sulphur content dipped to 17 cents a barrel to Singapore quotes, compared with 18 cents on Wednesday.
Meanwhile, Asia’s cash differentials for jet fuel remained unchanged on Thursday at a discount of 28 cents a barrel to Singapore quotes.
China’s May diesel production rose 1.1 percent to 15.14 million tonnes, the National Bureau of Statistics said on Wednesday.
Gasoil exports from India would also play a key role for the wider Asian markets in the short-term as the country’s domestic consumption would likely drop during monsoon, when travelling takes a hit due to heavy rains. India exported 1.99 million tonnes of diesel in May, up 28 percent from its April exports and about 2 percent higher compared with May last year, government data showed on Wednesday.
India’s jet fuel exports in May were at 550,000 tonnes, about 12 percent more than in April and about 15 percent higher from May 2017. Singapore onshore middle-distillate stocks rose 0.5 percent in the week to June 20 to 9.05 million barrels.
The July crack is lower at $ 13.10 / bbl with the 10 ppm crack at $ 13.95 /bbl. The regrade is lower at $ 1.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 180-cst fuel oil crack strengthened for a second day on Thursday, with the value reaching a discount of about $5.15 a barrel, the narrowest discount since June 6 , supported by falling supplies and lower oil prices.
Singapore’s fuel oil stocks for instance fell by about 4.6 percent or 925,000 barrels to reach a four-week low of 19.2 million barrels in the week to June 20, official data showed..
The July 180 cst crack is stronger at -$ 2.20 / bbl. The visco spread is at $ 1.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The July FO crack at $ 2.20 / bbl looks attractive to hedge. We will mostly have to let it run to settle to see the result of the hedge, but we will enter the hedge to lock an attractive margin any way.
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.