Crude Oil
Oil futures were little changed on Monday after paring earlier losses despite Saudi Arabia’s pledge to raise crude production to a record high. Brent crude futures gained 5 cents to settle at $79.83 a barrel. WTI crude also gained 5 cents to settle at $69.27 a barrel.
Saudi Energy Minister Khalid al-Falih told Russia’s TASS news agency that his country had no intention of unleashing a 1973-style oil embargo on Western consumers, but rather was focused on raising output to compensate for supply losses elsewhere, such as Iran.
Markets are nevertheless wary of the impact of U.S. sanctions on Iran’s oil sector which start on Nov. 4. This could impact up to 1.5 million bpd of supply.
Also worrying the market is the possible impact of US sanctions on Saudi Arabia. Several U.S. lawmakers have suggested imposing sanctions over the killing of journalist Jamal Khashoggi. The kingdom, the world’s largest oil exporter, pledged to retaliate against any sanctions with “bigger measures.”
European refineries’ crude oil intake in September was down 5.3 percent from the previous month as seasonal maintenance kicked in.
Naphtha
Asia’s naphtha crack rebounded slightly on Monday from its lowest in nearly four months to a two-session high of $73.07 a tonne.
More spot offers were seen from the UAE with ADNOC looking to sell a total of 150,000 tonnes of naphtha for November loading from Ruwais through a tender closing on Oct. 23. ADNOC does not usually offer naphtha in the spot market because most of its volumes are committed to long-term contracts, but it emerged recently with offers spot cargoes lifting in September and October. The reasons behind the spot offers were not clear but this has a bearish impact on a market already flooded with supplies.
The November crack has collapsed to – $ 3.35 / bbl
Gasoline
Asia’s gasoline eased to $3.26 a barrel as high stockpiles dragged, with October’s average now expected to be the worst for the month since 2013.
The November crack is lower at $ 4.35 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for 10ppm gasoil climbed to their highest premiums for 2018 on Monday, backed by firmer demand and tighter supplies, while the front-month spread widened its backwardated structure. Cash premiums for gasoil with 10ppm sulphur content rose to $1.72 a barrel to Singapore quotes, compared with $1.67 a barrel on Friday.
Gasoil inventories across regions including Singapore and the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub remain low, while buying interests for the industrial and transportation fuel is pretty strong.
Diesel exports from India, which remains pivotal for the overall Asian supplies, fell in September to 2.81 million tonnes, over 1 percent lower than exports in August. Indian diesel exports have dipped as domestic consumption have started picking up, and some refineries are going for unplanned maintenance.
Jet cash differentials flipped into premiums for the first time in a week on Monday. The differentials were at a premium of 1 cent a barrel to Singapore quotes, against a 2-cent discount on Friday.
The November crack is higher at $ 16.65 /bbl with the 10 ppm crack at $ 17.45 /bbl. The regrade is steady at $ 0.75 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s November 180-cst high sulphur fuel oil crack to Dubai crude edged slightly lower on Monday but was still trading at a premium, boosted by tight near-term supplies and firm demand.
Strong Saudi Arabian demand for fuel oil for use in power generation in place of crude oil is propping up demand for fuel oil as the world’s largest exporter seeks to maximise available supplies of crude for export ahead of looming U.S. sanctions on Iranian oil exports.
The prospective sanctions are contributing to concerns of tightening global supplies, adding to structural declines in fuel oil production from key producers like Russia, Venezuela and Mexico.
The front-month 180-cst crack to Dubai crude slipped to 34 cents a barrel on Monday, down from 40 cents a barrel on Friday, the highest premium since June 2017. Because fuel oil is a residual by-product of the refining process, it rarely trades at a premium to crude oil from which it is produced.
China’s fuel oil output in September slipped 1.8 percent from the same time last year to a total of 2.09 million tonnes, according to data released on the National Statistical Bureau on Monday. In the January-September period, China produced a total of 18.02 million tonnes of fuel oil, down 10.5 percent from the same period last year, the data showed.
The November 180 cst crack is steady at +$ 0.20 / bbl with the visco spread at $ 1.20 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to report today.
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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.