Crude Oil
Oil prices were mixed on Monday. Brent crude futures fell 34 cents to settle at $64.86 a barrel. WTI crude futures rose 45 cents to settle at $57.90 a barrel.
Market concerns about the possibility of a conflict between the United States and Iran have eased. As a result, worries about declining crude demand have resurfaced.
Hopes are waning for progress in Sino U.S. trade talks at this week’s G20 meeting as investors await a meeting between Presidents Donald Trump and Xi Jinping. Weak manufacturing data released on Monday by the Federal Reserve Bank of Dallas added to worries about slipping demand for crude oil.
Russian Energy Minister Alexander Novak said on Monday that international cooperation on crude production had helped stabilize oil markets and was more important than ever. He also voiced concerns about demand.
A surge in India’s oil imports from the United States outpaced growth in shipments from its traditional suppliers in the Middle East, after Washington imposed sanctions on Tehran in November, according to tanker arrival data obtained from sources. India, the world’s third-biggest oil importer, bought about 184 kbpd from the United States over November 2018 to May 2019, compared with about 40 kbpd in the same period a year earlier. “Venezuela’s oil output is now declining. Saudi grades are costly, and Iraq has limited capacity to sell extra oil. So Indian refiners can’t escape from U.S. oil,” said Sri Paravaikkarasu, director for Asia oil at energy consultancy FGE. She said the higher official selling prices (OSPs) of Middle Eastern grades and rising spot premium are also pushing India to buy more U.S. oil
Naphtha
Asia’s naphtha crack edged up to a three session high of $24.68 a tonne on Monday.
South Korea’s SK Energy bought heavy full range naphtha for first half August delivery at premiums in the high single digits per tonne level to Japan quotes on a cost and freight (C&F) basis. Hanwha Total had also bought heavy full range grade for the same period delivery last week at close to $8 a tonne premium.
The July crack is higher at -$ 6.15 /bbl
Gasoline
Asia’s gasoline margin rose to a one month high of $3.89 a barrel supported by supply disruptions in the U.S. Gasoline supply from the U.S. East Coast’s largest refinery Philadelphia Energy Solutions would be affected following a fire which has completely destroyed its alkylation unit.
The July crack is lower $ 5.60 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil flipped back to a discount of 3 cents a barrel to Singapore quotes, compared with a premium of 1 cent per barrel on Friday.
Cash differentials for jet fuel were at a discount of 11 cents a barrel to Singapore quotes on Monday, compared with a 10 cents discount on Friday.
The July crack for 500 ppm Gasoil is steady at $ 14.45 /bbl with the 10 ppm crack at $ 15.15 / bbl. The regrade is at +$ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s cash premiums for 380 cst fuel oil rose to a fresh 2019 high on Monday, amid steady buying interest, while refining margins for the residual fuel firmed to a near two week high.
Cash premiums for 380 cst fuel oil were at $5.11 a tonne to Singapore quotes, up from $4.28 on Friday and their highest since Dec. 6.
Meanwhile, the front month 380 cst barge crack to Brent crude for July edged up to minus $7.83 a barrel on Monday, against minus $8.38 on Friday.
The July180 cst crack is much stronger at – $ 0.10 / 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 for today. Fuel Oil cracks have become very strong. Should August rise above -$ 1.00 / bbl, we shall hedge a tranche. While July is tempting to hedge, it is too close to maturity.
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.