Crude Oil
Crude Oil recovered well today after Saudi Energy Minister, Khalid al-Falih said that Saudi would limit crude exports to 6.6 million barrels per day. Brent rose to $48.56 /bbl, up 50 cents on the day. WTI rose by 57 cents to settle at $45.34 /bbl.
Saudi’s pledge to keep exports limited to 6.6 mbpd does sound bullish prima facie being, as it were, 1 mbpd lower than levels one year ago. However, this figure needs to be reviewed in the back drop of two pieces of data viz.
- Saudi production in July 2016, was 10.6 mbpd. Its quota is pegged at 10.1 mbd. It was already producing 200 mbd below quota.
- While the export ceiling is 1 mbpd lower than a year back, it is about 400 kbd lower than last month. This, while certainly significant is not as alarming as the immediate reaction.
Additionally, Nigeria stated that it has no intentions of increasing production above 1.8 mbd for now. This statement has somehow been spun to say Nigeria is agreeing to a ‘quota’ of 1.8 mbd. Nigeria’s production, as per the latest OPEC report is close to 1.7 mbd and therefore, production out of Nigeria could actually increase!
Libya is expecting to increase production from its current 1.05 mbd to 1.25 mbd by the end of this years
Therefore, all in all, there does not appear to be much of a change in the supply position within OPEC.
Naphtha
Although still positive, naphtha cracks have reduced marginally as the recent spurt in demand from North Asia eased with buyers having completed their purchases.
The August crack is now at $0.35/bbl.
Gasoline
The gasoline cracks continues to fall as the strong demand is being offset by adequate availability.
The August crack has eased to $ 10.90 /bbl.
Distillates
Distillate cracks have fallen as more spot cargoes are offered in the market by India, Thailand and China. India, which until recently was aggressively importing diesel is now offering export cargoes as its refineries return from turnaround and demand slows due to the onset of monsoons. In Thailand also, refiners who were importing diesel since February due to maintenance have now turned to exporting the fuel, suggesting the maintenance may be over. In China, exports of diesel rose in June on a year on year basis as refiners turned to foreign markets to offload their excess production.
The August gasoil crack is lower at $ 12.75 /bbl. The regrade has fallen to -$0.55 / bbl today.
Fuel Oil
Fuel Oil cracks also continue to fall on the back of huge stockpiles across all major trading hubs and poor demand.
The 180 cst August crack is lower at -$0.55 /bbl. The visco spread is unchanged at $0.95 /bbl.
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.
Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity