Crude Oil
U.S. crude hit its highest level since 2014 on Monday amid rising concerns that Venezuela’s oil output could fall further following the country’s presidential election and potential sanctions on the OPEC-member nation. Brent crude futures gained 71 cents to settle at $79.22 a barrel. WTI crude also gained 96 cents to settle at $72.24 a barrel.
Prices firmed further as U.S. President Donald Trump had discussions with Russia and China about issuing new debt to Venezuela. Trump signed an executive order on Monday restricting Venezuela’s ability to liquidate state assets, a senior administration official told reporters. Any restriction on Venezuela’s financing, logistics or power supply could further depress the country’s crude output.
The US also said they will place the “strongest sanctions in history” on Iran unless Tehran took steps to correct its behavior. US Secretary of State Mike Pompeo added that the US did not plan to provide relief to European allies looking to conduct business with Iran.
Naphtha
Asia’s naphtha crack rose for a third straight session to reach $112.38 a tonne on Monday, the highest since Jan. 2, pushed up by demand and stronger fundamentals in the gasoline sector. Cash premiums for Naphtha delivered to South East Asia remain in the range of $ 15-16/ MT above MOPJ quotes.
The June crack however improved to $ 0.40 / bbl
Gasoline
Asia’s gasoline crack was at $9.70 a barrel, just 1.6 percent below May 17’s level when it touched a 3-1/2 month high after a sharper-than-expected drawdown in petrol stocks in the U.S. as summer demand kicked in.
The June crack has improved to $ 12.20 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Demand for air travel kept margins for Asian jet fuel above $16 a barrel on Monday although there have been no cash deals since May 10, but high oil prices could dent that demand.
In India for instance the government is looking to keep rising fuel prices in check, its oil minister said on Monday, as retail rates for diesel and petrol were touching record highs in capital city New Delhi and financial hub Mumbai.
The June crack is weaker at $ 15.75 / bbl with the 10 ppm crack quoting at $ 16.45 /bbl. The regrade has improved to $ 0.45 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s June 180-cst fuel oil crack to Brent crude climbed to a six-week high on Monday, supported by weaker crude prices when compared to Friday as well as rising seasonal demand for cooling and tighter supplies amid ongoing refinery maintenance in key producing regions. The June 180-cst crack narrowed its discount to Brent crude to $6.92 a barrel on Monday, up from minus $7.41 a barrel on Friday. The front-month crack discount was last narrower on April 9 at minus $6.89 a barrel.
The June 180 cst crack is lower at -$ 3.55 / bbl. The visco spread has widened to $ 1.65/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The June 180 cSt-Dubai crack is still hovering around -$3.50. Since it has not improved, we will still refrain from hedging.
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.