Oil prices rose on Tuesday as the market shifted focus to the possibility of increased Chinese demand, drawing attention away from oversupply worries and trade tensions between China and the United States. Brent crude settled 38 cents higher at $73.44 a barrel, after it reached a session high of $74. U.S. West Texas Intermediate (WTI) settled up 63 cents, or nearly 1 percent, to settle at $68.52.
Reports that China will increase infrastructure spending helped lessen fears that U.S.-China trade tensions will reduce the country’s demand for oil.
The API has reported significant draws in both crude and products. While the markets were expecting smaller draws in crude and gasoline, the market was expecting a build in distillates. Markets will await the official DOE numbers to be published later today.
Asia’s naphtha crack rose for the third straight session on Tuesday to hit a two-month high of $113.13 a tonne due to tighter supplies. Asian buying interest for naphtha in the meantime has remained strong.
The August crack has eased to $ 0.40 /bbl.
Asia’s gasoline crack rose along with naphtha to nearly a two-month high of $8 a barrel. A stronger European and U.S. markets for petrol were lifting the crack value in Asia although supplies were still sufficient in the East.
Demand for European gasoline from Africa was seen firm as several tankers that had been waiting outside Nigerian ports have been discharged in recent days in a sign of strong demand in the country.
The August crack has increased to $ 10.55 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for gasoil with 10ppm sulphur content narrowed their discounts on Tuesday to 7 cents a barrel to Singapore quotes, compared with a discount of 12 cents on Monday. The front-month spread, which flipped to a premium in the previous session after remaining in contango for about a month, was unchanged on Tuesday.
Meanwhile, cash premiums for jet fuel rose to 5 cents a barrel to Singapore quotes, up from Monday’s premium of 3 cents. The overall fundamentals for jet fuel looks more or less supported for the remainder of this year thanks to steady aviation demand.
The August crack is higher at $ 14.25 / bbl with the 10 ppm crack at $ 15.15 /bbl. The regrade is lower at $ .95 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Singapore 380-cst ex-wharf premiums extended gains on Tuesday, soaring to multi-month highs amid shortages of finished grade bunker fuels.
Concerns of fuel oil shipments from the United States into Singapore contaminated with unusual amounts of phenol and styrene helped further tightened bunker fuel supplies and bolster ex-wharf premiums. However, no significant issues of contaminated bunker fuels were yet evident in the Singapore market.
The August 180 cst crack is weaker at -$ 0.80 / bbl with the visco spread at $ 1.25 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Fuel Oil in the prompt eases slightly bring joy to our last hedges for August and September. There is a dilemma whether we would like our hedges to settle in the money or whether the refiners should make more money on their product sales.
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.
Click Here to see how all our recommendations have fared
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.