Oil prices climbed another 1 percent on Monday as Asia reacted to the Middle East events over the weekend. Brent crude futures settled 79 cents higher at $63.26 a barrel. WTI crude futures rose 59 cents to end the session at $56.22 a barrel.
The gains were capped by the lifting of force majeure on loadings of crude at Libya’s Sharara oilfield.
In the straits of Hormuz, no major escalation with Britain or the United States appears imminent. However, The UK will attempt to build a European-led force protecting free navigation in the Strait of Hormuz after last week’s capture of the tanker Stena Impero by Iranian forces, foreign minister Jeremy Hunt said Monday.
The US has sanctioned the China’s state-run energy company Zhuhai Zhenrong Co Ltd for allegedly violating restrictions imposed on Iran’s oil sector, US Secretary of State said in a speech on Monday.
Last week, data showed shipments of crude from Saudi Arabia, the world’s top oil exporter, fell to a 1-1/2-year low in May.
Speculative money is flowing back into oil in response to the escalating dispute between Iran, the United States and other Western nations, along with signs of falling supply. In early May, new, tighter U.S. sanctions on Iran took effect. Hedge funds and other money managers raised their combined futures and options positions on U.S. crude for a second week and increased their positions in Brent crude as well.
Asia’s naphtha crack eased by 10 cents from a four-session high on July 19 to a two-session low of $31.50 a tonne on Monday.
Indian Oil Corporation reportedly sold a cargo for loading Aug. 3-5 to Litasco, the trading arm of Lukoil, at a premium of $2-$3 a tonne to IOC’s own price formula free on board. Kuwait had offered 50,000 tonnes of full-range naphtha for loading Aug. 26-27, bringing its total August exports to 156,000 tonnes including the light grade cargoes that were sold. It did not issue any tenders to sell July spot naphtha.
The August crack is lower at -$ 5.60 /bbl
Asia’s gasoline margins dropped to a 1-1/2 week low of $7.10 a barrel, weighed down by firm crude prices.
China’s CNOOC has offered up to 38,000 tonnes of 92-octane gasoline for Aug. 21-22 loading from Huizhou Dagang Terminal through a tender closing on Tuesday. CNOOC recently sold up to 37,000 tonnes of the fuel for Aug. 11-12 from the same port at premiums of about $2 a barrel to Singapore quotes FOB, about double the price fetched for a cargo sold for July 10-11 loading..
The August crack is lower at $ 7.10 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10ppm gasoil rose to 25 cents a barrel to Singapore quotes on Monday, up from a premium of 22 cents per barrel on Friday.
The August/September time spread traded at a premium of 24 cents a barrel on Monday, compared with Friday’s 25 cents per barrel.
Gasoil prices were getting support from lower runs at some of the regional refineries, which has partly helped to tighten the market.
Cash premiums for jet fuel were at 13 cents a barrel to Singapore quotes, compared with 15 cents a barrel on Friday.
The August crack for 500 ppm Gasoil is higher at $ 16.35 /bbl with the 10 ppm crack at $ 17.05 / bbl. The regrade is at +$ 0.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month viscosity spread climbed to a more than seven-week high on Monday amid tight blendstock supplies. The August viscosity spread rose to $11.75 per tonne on Monday, up 25 cents a tonne from but the previous session and its highest since May 31. A shortage of cutter-stock materials required to blend high-viscosity, high-sulphur fuel oils helped lift the price differential between 180-cst and 380-cst fuel oil.
The August 180 cst crack has crashed to + $ 1.60 / bbl with the visco spread at $ 1.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The fuel oil cracks have receded but Cal-20 gasoil seems to have surged. We shall consider laying a fresh hedge should they cross $ 19.00 /bbl over the next couple of days.
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.
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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.