Crude Oil
Oil rose to almost $64 on Tuesday, jumping late in the session after the head of U.S. Central Command said the United States may have taken down a second Iranian drone over the Strait of Hormuz last week. Brent crude futures settled 57 cents higher at $63.83 a barrel. WTI crude futures rose 55 cents to end the session at $56.77 a barrel.
The full restart of Libya’s largest oil field also pressured prices.
On Tuesday, the IMF cut its forecast for global growth, warning that further U.S.-China tariffs or a disorderly exit for Britain from the European Union could weaken investment and disrupt supply chains. The International Energy Agency, however, said global supply remains plentiful due to strong growth in output from the United States and other non-OPEC producers.
On Sunday, Goldman Sachs lowered its 2019 oil demand projection, joining other forecasters.
Trade tensions are on the rise between the European Union and the US as well. The EU has said it will retaliate with extra duties on 35 billion euros ($39.1 billion) worth of US goods if Washington imposes punitive tariffs on EU cars, the bloc’s trade chief said on Tuesday.
Global oil consumption has stalled since the middle of 2018, corresponding closely with the slowdown in global manufacturing activity and freight movements, making lower oil prices inevitable despite the best efforts of Saudi Arabia and its allies to reduce production.
In a surprise move, President Trump on Tuesday questioned the US role protecting oil shipments through the Strait of Hormuz, arguing that the expensive military presence benefits “very rich” Middle East exporters and Asian importers when the US no longer needs the oil.
apI DAta
U.S. crude stocks fell more than expected last week, declining in the week to July 19 by 11 million barrels, to 449 million, the trade group American Petroleum Institute said on Tuesday. That compared with analysts’ expectations of a decrease of 4 million barrels. Oil may find more support if these draws are corroborated by the DOE.
The build in product inventories notwithstanding the huge crude draw would indicate that imports have fallen this week. The build in gasoline does not augur well for product demand and therefore, eventually, crude demand.
Naphtha
Asia’s naphtha crack fell to a four-session low of $28.98 a tonne on Tuesday.
The August crack is lower at -$ 5.75 /bbl
Gasoline
Asia’s gasoline margins slipped to a three-week low of $5.48 a barrel on ample supplies.
Chinese gasoline exports in June hit 1 million tonnes, and industry sources expect July volumes to stay high.
The August crack is lower at $ 6.30 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10 ppm gasoil, which flipped into premiums last week, rose for a fifth consecutive session to 28 cents a barrel to Singapore quotes on Tuesday, levels not seen since early-November. The premiums were at 25 cents per barrel on Monday.
Gasoil exports from South Korea in June were at 1.9 million tonnes, about 8% lower from May. June gasoil exports from Japan and India were also down about 54% and 4%, respectively, from the previous month.
South Korean consumers are ramping up gasoil purchases before an ongoing tax cut on transportation fuel in the country expires in August. South Korea had initially cut domestic transport fuel taxes by 15% for six months in November, later extending the cuts for four months but lowering it to 7%.
Cash premiums for jet fuel were at 12 cents a barrel to Singapore quotes, compared with 13 cents per barrel a day earlier.
The August crack for 500 ppm Gasoil is lower at $ 16.20 /bbl with the 10 ppm crack at $ 16.90 / bbl. The regrade is at +$ 0.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high-sulphur fuel oil (HSFO) market slipped on Tuesday with cash premiums, front-month time spreads and cracks all edging lower.
The August 380-cst HSFO barge crack to Brent crude slipped to a one-week low of minus $8.40 a barrel, down from minus $8.01 a barrel in the previous session.
Despite the weaker prices on Tuesday, market sentiment remained bullish amid few signs of easing supply constraints in the Singapore trading and storage hub.
The August 180 cst crack has crashed to + $ 0.30 / bbl with the visco spread at $ 1.60 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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.
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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.