Crude Oil
Oil prices were mixed on Tuesday as well. Yesterday Brent crude futures rose 19 cents to settle at $65.05 a barrel. WTI crude futures fell 7 cents to settle at $57.83 a barrel.
Oil prices were mixed on Tuesday ahead of data expected to show U.S. crude stocks declining, outweighing investors’ concerns that U.S. China trade tensions could dampen fuel demand.
U.S. President Donald Trump threatened on Tuesday to obliterate parts of Iran if it attacked “anything American,” in a new war of words with Iran which condemned fresh U.S. sanctions on Tehran as “mentally retarded.” But Trump later left the door open for talks, saying that Iran should speak to the United States “peaceably” to ease tensions and potentially lift U.S. economic sanctions
China continues to maintain a firm stand and has, importantly, received its first cargo of crude from Iran post the revocation of the waiver of sanctions. Iran has been delivering significant volumes of crude oil into bonded storage in China over the last year, selling that oil to China in subsequent months. CNPC’s nearby storage facility—part of China’s Strategic Petroleum Reserve—can hold 19 million barrels. But in the absence of waivers, the storage of Iranian oil would still contravene US sanctions, making it likely that the delivered oil was taken by CNPC as a purchase. Nevertheless, several other tankers are expected to arrive in China in the coming weeks.
Growth in India’s demand for gasoline and jet fuel is expected to slow slightly this year, the head of the country’s largest refiner said on Tuesday, as prospects for world trade deteriorate. IOC’s Chairman Sanjiv Singh said overall demand will remain at 4% to 4.5%. Demand for gasoline and jet fuel demand is expected to rise by 7-8% this year, Singh said, down from rates of 9-10% in the previous year. Diesel consumption could increase by 3% this year. The country’s plans to add smaller airports to improve domestic transport systems will drive appetite for jet fuel, he added.
api data
The API reported a huge draw in crude stocks yesterday. The news has resulted in a spike in crude prices this morning. Gasoline stocks also fell against an expected build while the build in distillates was less than expect. If this fairly bullish report is corroborated by the DOE report today, we can expect prices to stay firm.
Naphtha
Asia’s naphtha crack fell to a four session low of $20.55 a tonne on Tuesday.
Spot demand was mostly muted following purchases from South Korea’s SK Energy on Monday.
The July crack is lower at -$ 6.25 /bbl
Gasoline
Asia’s gasoline margin had also eased to a three session low of $3.04 a barrel on ample supplies. Refinery outages in the United States were not giving support to the Asian market as it did in the previous day.
The July crack is higher at $ 6.30 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil widened to 6 cents a barrel to Singapore quotes, compared with a 3 cents discount per barrel on Monday.
The July/August time spread widened its contango structure by two cents to a discount of 17 cents a barrel on Tuesday.
Cash discounts for jet fuel narrowed by a cent to be at 10 cents a barrel to Singapore quotes on Tuesday.
The physical jet fuel market in Singapore remained muted with no bids or trades on Tuesday.
The July crack for 500 ppm Gasoil is steady at $ 14.85 /bbl with the 10 ppm crack at $ 15.55 / bbl. The regrade is at +$ 0.30 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380 cst high sulphur fuel oil (HSFO) front month time spread hit a seven month high on Tuesday amid a tightening supply outlook.
The July/August 380 cst time spread widened its backwardated structure to $11.50 a tonne on Tuesday, up from $11.25 a tonne in the previous session and its highest since Nov. 29.
The July180 cst crack is weaker at – $ 0.90 / 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.
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.