Oil prices fell about 2% as the DOE confirmed the build in stocks reported by the API. Brent crude futures settled at $70.99 a barrel, down $ 1.19. WTI settled $ 1.17 lower at $ 61.42 a barrel. The expiring June settled at $62.99 a barrel, down 11 cents.
The rise in stocks compounded investor worries that a trade fight between Washington and Beijing could dent crude demand over the long haul. Additional talks between top officials have not been scheduled since the last round ended in a stalemate on May 10, when U.S. President Donald Trump imposed the higher levies on Chinese goods.
U.S. Treasury Secretary Steven Mnuchin said Washington is at least a month away from enacting its next round of tariffs on Chinese imports as it studies the impact on consumers. The conflict is weighing on economic growth forecasts and oil demand predictions. The OECD, on Tuesday, revised down its global growth forecast for the year.
U.S. Federal Reserve officials at their last meeting agreed that their current patient approach to setting monetary policy could remain in place “for some time,” a further sign policymakers see little need to change rates in either direction. Analysts saw little new in the minutes regarding Fed policy, though some noted that policymakers’ views may have changed in the intervening weeks since Trump took a harder trade line with China.
Crude stocks continued to build against market expectations of draws. This is the first time in several weeks that we have seen builds across the board.
The build in crude stocks seems to be a hangover from previous data as our material balance statement shows stocks to be more or less evenly balanced. A decrease in imports was more or less balanced by a reduction in exports and an increase in production.
The increase in gasoline stocks appears to be due to a huge increase in net imports though this was mitigated a bit by a good increase in gasoline demand.
Distillate stocks appear to have built due to a sizable drop in demand for the product.
Asia’s naphtha intermonth spread flipped into contango on Wednesday for the first time since December, in a sign that supplies are outpacing demand.
South Korea’s Hanwha Total bought heavy full-range naphtha on Wednesday for first-half July at premiums in the high single digit a tonne level to CIF Japan quotes, higher than the $5 to $6 a tonne premium it had paid on May 13. South Korea’s GS Caltex had also bought similar grade in the high single digit premium a tonne. But the two deals alone were not enough to turn the weak market around as the prolonged maintenance shutdown of Hanwha Total’s cracker since end March had a more profound impact.
Any unexpected or extended shutdown of crackers would hit demand as these units absorb open-specification and not heavy full-range naphtha as their main feedstock. High volumes of naphtha being shipped to Asia from the West including Europe due to high refinery runs in most of first-half of 2019 added to the ample supply woes.
European refineries had produced 3.6 percent more gasoline and 7.4 percent more naphtha in April compared with a year ago, data from Euroilstock showed on Tuesday. Although Middle Eastern naphtha exports to Asia fell last week to 771,000 tonnes, these were still higher than volumes for the same week from a year ago at 740,000 tonnes, data from Refinitiv Oil Research showed.
The June crack is steady at – $7.30 /bbl;
No fresh news on the Gasoline market.
The June crack is lower at 5.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s 10ppm gasoil margin fell to a three-week low of less than $14.25 a barrel on Wednesday as high supplies countered supply woes in Europe following the contamination found in Russia oil. Russia halted oil flows along the pipeline to Eastern Europe and Germany in April because of contaminated crude, leaving refiners in Europe scrambling to find supplies.
The June crack for 500 ppm Gasoil is steady at $ 14.15 /bbl with the 10 ppm crack at 14.85 / bbl. The regrade is at -$ 0.40 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash premiums for 380 cst fuel oil rose for an eighth straight session on Wednesday to a two-month high, lifted by a tightening supply outlook and rising seasonal demand. 380-cst cash premiums climbed to 36 cents per tonne to Singapore quotes, the widest since March 20 and up from a 15 cent per tonne premium in the previous session.
Meanwhile, the front-month viscosity spread returned to a more than one-year high hit on Friday, amid tight supplies of blendstock materials and plentiful availability of high-viscosity fuels. The June viscosity spread rose to $12.50 a tonne on Wednesday, up 25 cents a tonne from the previous session. On Friday, the viscosity spread hit its highest level since April 2018, at $12.50 per tonne.
The June180 cst crack is lower at – $ 3.35 / bbl with the visco spread at $ 1.95 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Nothing fresh to report today.
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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.