Crude Oil
Oil rose about 2.5% on Wednesday after government data showed a surprise draw in U.S. crude stocks. Brent crude futures rose $ 1.47 cents to settle at $61.17 a barrel. WTI crude futures rose $ 1.49 to settle at $55.97 a barrel..
US Democratic lawmakers hope to complete their impeachment inquiry into the US President by year’s end and are coalescing around two articles of impeachment – abuse of power and obstruction, lawmakers and aides told Reuters
Japanese factory activity shrank at the fastest pace in Oct’19 since Jun’16, the Jibun Bank Flash Japan Manufacturing PMI slipped to 48.5, largely hurt by slumping new orders and output.
South Korea’s economy grew +0.4% QoQ and +2.0% YoY in Q3’19, less than expected, and though exports showed signs of steadying the overall outlook was clouded by a domestic spending slump and intensifying global risks from trade frictions.
DOE data
U.S. crude stocks fell 1.7 million barrels last week as refineries hiked crude runs by 429 kbpd. Oil imports fell to a record low of 5.86 mbpd while exports were near a record high of 3.68 mbpd. As per our material balance statement, the effective draw in stocks is much higher than reported.
Conversely, the draw in gasoline stocks by 3.1 million barrels seems to have been overstated as per the table above. Similarly, the draw in distillate stocks, which takes levels to a seasonal low appears to have been similarly overstated.
Naphtha
Asia’s naphtha crack eased to a two-session low of $90.20 a tonne on Wednesday but the current level reflects a much stronger market compared to most of this year when the average value between January and first-half September was at $34.
Tight supplies are persisting due to strong demand and heavy refinery maintenance. South Korea’s GS Caltex bought heavy full-range naphtha on Tuesday for first-half December delivery at premiums around $29 a tonne to Japan quotes on a C&F basis. This is nearly six times what it had paid on Aug. 13, Reuters data showed. Spot premiums are now mostly at levels not seen since 2013.
The November crack is lower at – $ 2.45 / bbl.
Gasoline
Asia’s gasoline crack fell by 14.9% to $6.26 a barrel, the lowest since Sept. 26 and weighed down by high Chinese exports.
China exported 1.67 million tonnes of gasoline in September, just slightly below an all-time high of close to 1.7 million tonnes in March 2018, data from the General Administration of Customs showed. Between January and September this year, China had exported a total of 11.07 million tonnes of gasoline versus 10.3 million tonnes for the same period last year, the data showed. Industry sources expect China to have abundant supplies due to its expanding refinery capacity.
The November crack is lower at $ 6.55 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for 10 ppm gasoil fell on Wednesday, hurt by weaker buying interest in the physical market, while refining profit margins for the industrial fuel eased. Cash premiums for 10ppm gasoil dipped for the fifth consecutive session to $1.02 a barrel to Singapore quotes on Wednesday, having hit a near one-year high of $1.66 a barrel last week. They were at $1.10 per barrel a day earlier. The cash differentials for the benchmark gasoil grade however were still more than three times higher compared with levels a month ago, partly due to limited supplies.
Around November and December, when all of the regional refineries undergoing turnarounds come back from maintenance, the market would likely lose its current strength.
Cash discounts for jet fuel narrowed to 8 cents a barrel to Singapore quotes, compared with 12 cents a barrel on Tuesday.
The November crack for 500 ppm Gasoil has dropped to $ 16.45 /bbl with the 10 ppm crack at $ 17.45 / bbl. The regrade is at + $ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Physical trade liquidity in 0.5% low-sulphur fuel oil cargoes firmed in the Singapore trading window with 60 KT of the fuel exchanging hands on Wednesday, matching the daily record volume seen on Friday.
The November 180 cst crack is higher at -$ 14.40 / bbl with the visco spread at $ 2.15 /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.
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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.