Crude Oil
Oil prices fell nearly 1% on Monday after comments from a U.S. official fed regarding concerns surrounding the U.S.-China trade war, adding to worries that a slowing global economy would reduce demand for oil. Brent crude futures fell 46 cents to settle at $58.96 a barrel. WTI crude futures fell 47 cents to settle at $53.31 a barrel..
Although President Donald Trump has said he would like to sign a deal when he meets his Chinese counterpart at November’s APEC summit, the U.S. commerce secretary said an initial trade deal does not need to be finalized next month. U.S. Trade Representative Robert Lighthizer told reporters that the administration’s target is still to finish phase one by the time the APEC meetings take place in Chile on Nov. 16 and 17. He added there are outstanding issues to resolve.
Adding to tensions, China is seeking $2.4 billion in retaliatory sanctions against the United States for non-compliance with a WTO ruling in a tariffs case dating back to the era of President Barack Obama.
On the supply side, Russia, the world’s second-largest oil producer, said on Sunday it did not meet its supply reduction commitment in September because of an increase in natural gas condensate output ahead of winter.
European refinery production in September fell 4% from the previous month and 4.2% year-on-year. Production hit 10.451 million bpd, with output declining across all refined products.
The US Treasury Department on Monday renewed a license allowing Chevron, the last US operating energy company in Venezuela, to continue drilling in the country for another three months through 22 Jan’20
Naphtha
Asia’s naphtha crack recovered to a two-session high of $86.53 a tonne, while the intermonth timespread climbed to a four-session high of $26.50 a tonne, indicating tight supplies.
More than 1.6 million tonnes of naphtha from Europe, the Americas and the Mediterranean are expected to land in Asia next month, but supplies are still expected to be tight because of lost production in October. December arriving cargoes so far are seen at 700 to 800 KT but the final volumes are likely to be higher as there is still time to book cargoes for December arrival. Amongst the December arriving cargoes, at least one of 80 KT from Algeria was provisionally booked by Saudi Aramco on tanker British Restraint.
The November crack is higher at – $ 2.00 / bbl.
Gasoline
No fresh news on Gasoline markets.
The November crack is lower at $ 7.60 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10ppm gasoil eased to $1.27 a barrel to Singapore quotes on Monday from $1.43 on Friday. The cash differentials hit a near-one-year high of $1.66 a barrel last Wednesday.
The front-month timespread for the benchmark gasoil grade in Singapore widened its backwardation by 3 cents on Monday to trade at 83 cents per barrel.
Cash differentials for jet fuel were at a discount of 11 cents a barrel to Singapore quotes, hurt by muted demand in the physical market, where there were no bids or offers on Monday. Jet cash differentials were at an 8-cent discount on Friday.
The November crack for 500 ppm Gasoil has risen to $ 17.10 /bbl with the 10 ppm crack at $ 18.10 / bbl. The regrade is at + $ 0.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s low-sulphur fuel oil (LSFO) market saw continued buying interest for physical cargoes of the fuel in the Singapore trading window on Monday after the record trade volume seen on Friday. The increased trade activity comes a little over two months before the global cap in the sulphur content of marine fuels from 3.5% currently, to 0.5% starting January 2020 as mandated by the International Maritime Organization. In a reflection of firming immediate demand for LSFO bunkers, the LSFO front-month time spread flipped to a premium of $1.50 a tonne on Monday, up from a discount of $2.25 a tonne on Friday.
The November 180 cst crack is higher at -$ 14.50 / bbl with the visco spread at $ 2.20 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh recommendations for 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.
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.