Oil prices fell 1% on Wednesday, failing to draw lasting support from a large decrease in U.S. crude stockpiles as investors worried about global oil demand. Brent crude futures dropped 65 cents to settle at $63.18 a barrel, while WTI crude futures fell 89 cents to settle at $55.88 a barrel.
Earlier in the session, the front-month Brent contract flipped to trade at a discount to the second-month contract for the first time since March. Sentiment in the oil market has darkened as investors worry that slowing global economic growth will weaken demand for oil.
OPEC members Saudi Arabia and Kuwait have discussed resuming oil production in jointly operated fields in the Saudi–Kuwaiti Neutral Zone. The two countries halted output from the oilfields – Khafji and Wafra – more than four years ago, cutting some 500,000 barrels per day, or 0.5 percent of global oil supply.
China issued its third batch of export quotas for refined oil products for 2019, totalling 6 MMT. The new batch raises the total export quotas for refined oil products to 48.15 MMT in 2019. That compares to 43 MMT through the same period last year.
Crude stocks fell drastically, hit by not only the curtailing for production due to Tropical Storm Barry, but also a rise in exports by around 700 kbpd. Compared to drop in production rates, refining rates dropped just marginally by 230 kbpd leading to the huge drawdown in stocks.
While the gasoline stocks were more or less balanced for the week, our material balance statement would suggest a larger drawdown in distillate stocks than reported.
Asia’s naphtha crack fell for a third straight day to reach a one-week low of $27.98 a tonne.
Several buyers emerged this week to buy naphtha from the spot market for first-half September arrival. Malaysia-based Titan snapped up the fuel mid-week at discounts in the low single digit a tonne level to Japan quotes on a cost-and-freight (C&F) basis. South Korea’s KPIC paid about a $1 a tonne premium to Japan quotes on a C&F basis while Hanwha Total paid a premium of $8 to $9 a tonne to Japan quotes on a C&F basis. The purchases came a day after South Korea’s SK Energy paid premiums in the high single digit a tonne level to Japan quotes on a cost-and-freight (C&F) basis.
The August crack is lower at -$ 6.05 /bbl
Asia’s gasoline neared a month low of $4.38 a barrel as supplies continue to be ample. Light distillate stocks in Fujairah dropped by 375 kb to 7.48 million barrels.
The August crack is lower at $ 5.80 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10 ppm gasoil rose to 30 cents a barrel to Singapore quotes on Wednesday, from 28 cents per barrel on Tuesday.
Cash premiums for jet fuel were at 21 cents a barrel to Singapore quotes on Wednesday, compared with a premium of 12 cents per barrel on Tuesday.
The jet fuel market in Asia is supported by a booming aviation market that has grown substantially in recent years. Currently, there is also a usual flow of jet fuel from Asia to the United States with at least three medium-range tankers scheduled to be heading for the U.S. West Coast from South Korea at the moment.
Middle distillate stocks in Fujairah dropped by 213 kb to 2.1 million barrels .
The August crack for 500 ppm Gasoil is steady at $ 16.20 /bbl with the 10 ppm crack at $ 16.90 / bbl. The regrade is at +$ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
The front-month 380-cst high-sulphur fuel oil (HSFO) barge crack widened its discount to Brent crude on Wednesday amid rising crude oil prices. The August 380-cst HSFO barge crack to Brent fell to about minus $8.85 a barrel, down from minus $8.65 a barrel in the previous session. The front-month crack value is now at a more than one-month low.
Total fuel oil flows into East Asia for July are expected to be firmly higher versus June’s 4.62 million tonnes with overall arbitrage volumes anticipated in the 5.5-6 million tonne range in July.
Fuel Oil stocks in Fujairah jumped by 1.2 million barrels to 9.8 million barrels
The August 180 cst crack has improved to + $ 0.75 / bbl with the visco spread at $ 1.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No fresh action today.
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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.