Crude Oil
Oil prices plunged more than 2% on Tuesday after U.S. President Donald Trump rekindled fears the U.S.-China trade conflict that has crimped energy demand is far from over. Brent futures dropped $ 1.67 to settle at $63.10 a barrel, while WTI crude eased $ 1.35 to settle at $57.29/bbl. This is their lowest settle since September 14
In a United Nations address, Trump accused China of unfair trade practices, including “massive” market barriers, currency manipulation and intellectual property theft, a few days after officials from the world’s two largest oil-consuming economies held inconclusive trade talks in Washington.
U.S. stocks fell, with the S&P 500 and the Nasdaq poised for the biggest declines in a month, as calls for impeachment of Trump gained momentum, while weak consumer confidence data added to worries over the prolonged Sino-U.S. trade war.
A private sector report showed U.S. consumer confidence fell by the most in nine months in September. Sluggish economic data in leading European economies and Japan also weighed on crude prices.
Prices extended their losses in after-hours trading as industry data showed an unexpected build in U.S. crude stockpiles. U.S. crude inventories rose 1.4 million barrels last week, the American Petroleum Institute said, compared to analysts’ forecasts of a 200,000-barrel drawdown. The government will release its weekly inventory report on Wednesday.
Some analysts expect U.S. crude stocks to remain low after a Tropical Storm Imelda disrupted energy operations on the Gulf Coast last week. They also expect U.S. crude exports to increase over coming weeks after the attack on Saudi Arabia’s largest oil-processing facility that halved output in the world’s top oil exporter. State oil company Saudi Aramco is buying oil originating in neighbouring countries to meet its supply obligations to foreign refineries. Its trading arm is arranging for crude from the United Arab Emirates and Kuwait to cover its commitments to certain buyers.
European powers – Britain, Germany and France – backed the United States in blaming Iran for the Saudi attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programmes and regional security. At the U.N. General Assembly, Trump denounced Iran, but said there is a path to peace, which somewhat eased the oil market’s worries about geopolitical risks.
Democrats in the US House of Representatives on Tuesday launched a formal impeachment inquiry into President Donald Trump, accusing him of seeking foreign help to smear Democratic rival Joe Biden ahead of next year’s election.
The UK Supreme Court ruled on Tuesday that Boris Johnson’s decision to shut down parliament in the run-up to Brexit was unlawful, but a defiant prime minister said he disagreed and vowed that Britain would leave the EU by 31 Oct’19, come what may.
api data
The crude build appears to have caught the market by surprise in the wake of shut down of facilities due to tropical storm activities. The draw in gasoil is the only supportive data in the report as the API reported a build of crude stocks at Cushing.
Naphtha
Asia’s naphtha cracks extended losses as the crack settled at $40.30 a tonne on Tuesday
Spot prices of the fuel, however, remained firm. South Korea’s GS Caltex emerged to buy heavy full-range naphtha for late October to early November delivery, a day after Hanwha Total had bought similar grades in the previous session. GS Caltex had paid a premium of $4 to $5 on Aug. 13 for cargoes scheduled for second-half September delivery. Hanwha Total had paid a premium in the high teens a tonne to Japan quotes on a C&F basis on Monday. The last time Hanwha Total had paid more than $16 a tonne premium for the heavy full-range grade was in 2018.
The October crack is lower at – $ 5.45 / bbl.
Gasoline
No fresh news on the gasoline markets.
The October crack is flat at $ 7.60 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10ppm gasoil rose to 31 cents a barrel to Singapore quotes on Tuesday, up from 29 cents per barrel a day earlier.
Cracks for the benchmark gasoil grade have surged about 15% over the last one month, partly buoyed by expectations for incremental demand ahead of a switch to cleaner marine fuels from 2020. Lesser exports from China in August have helped tighten gasoil supplies to an extent. But analysts expect Chinese shipments of refined products would to grow significantly in the coming months.
China’s diesel exports dropped to 1.32 million tonnes in August from 1.58 million tonnes in July, and 16.5% lower than last year, data from the General Administration of Customs showed on Monday. Meanwhile, India also exported lesser diesel barrels in August, and Saudi Arabia was buying spot gasoil cargoes following an attack on its oil facilities last week. All these factors are contributing to tighten the gasoil market in the short-term. A Panamax vessel, Lian Bai Hu, was provisionally chartered by Aramco Trading o carry 60 KTof gasoil from Vadinar in western India to Arabian Gulf by Oct. 2.
Cash premiums for jet fuel rose to 12 cents a barrel to Singapore quotes on Tuesday, six cents higher from Monday.
The October crack for 500 ppm Gasoil is lower at $ 17.40 /bbl with the 10 ppm crack at $ 18.10 / bbl. The regrade is at + $ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high-sulphur fuel oil market extended losses on Tuesday, pulling premiums away from record highs in the previous week amid expectations of deteriorating HSFO demand ahead of stricter marine fuel rules from the start of 2020.
The prompt 380-cst HSFO backwardated structure, fuel oil cracks and physical cargo cash premiums traded lower on Tuesday from their previous close. The 380-cst HSFO Nov./Dec. time spread was trading at $30.25 a tonne on Tuesday, down from $42.25 a tonne in the previous session and halved from the record $60.50 a tonne it fetched the same time last week. The front-month 380-cst HSFO barge crack was also $1.27 a barrel lower on Tuesday to minus $19.79 a barrel versus Brent crude prices.
The October 180 cst crack has once improved to -$ 5.20 / bbl with the visco spread at $ 1.25 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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.