Crude Oil
Oil prices rose Tuesday on global supply concerns following U.S. sanctions on Iran’s oil exports. Brent crude futures settled at $ 81.87 a barrel, up 67 cents. WTI crude futures rose just 20 cents to settle at $72.28 a barrel.
Brent hit $82.55 per barrel, its highest since Nov. 10, 2014 in continuation from Monday, but then retraced gains to settle just slightly higher after U.S. President Donald Trump called again on OPEC to boost crude output. Brent is on course for its fifth consecutive quarterly increase, the longest stretch since early 2007, when a six-quarter run led to a record high of $147.50 a barrel.
In an address to the UN General Assembly, US President Trump commented that OPEC+ is “ripping off the rest of the world” during again signaling his desire for lower oil prices. Trump also said in his speech that Washington will put more sanctions on Iran following oil sanctions in November.
In the meanwhile, in preparation to the upcoming sanctions, the following actions have been noticed around the world.
- The European Union has announced that it would establish a special payments channel to maintain economic ties with Iran.
- Saudi Arabia is said to be diverting Khuff condensate cargos from its domestic refineries for export, in order to meet demand from customers who are shunning Iranian supply.
- Indian refiners are said to be stopping purchasing crude from Iran from November onwards.
API Data
The API reported a build of close to 3 million barrels in its report yesterday contrary to analysts expectation of a draw. Gasoline inventories too, built more than expect. Distillate inventories however, reduced slightly contrary to market expectations.
Naphtha
Asia’s naphtha crack extended losses to reach a 1-1/2 week low of $94.65 a tonne as high oil prices continued to drag. Spot demand for naphtha in the meantime was thin as participants were away this week at the Asia Pacific Petroleum Conference (APPEC) held in Singapore.
The October crack is lower at -$ 0.65 /bbl
Gasoline
Asia’s gasoline crack sank to more than a month low of $7.37 a barrel.
Going forward, gasoline fundamentals could be hurt by additional production. In China for instance, refining capacity will grow to 880 million tonnes a year (about 17.6 million barrels per day) by 2020..
The October crack is lower at $ 9.35 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian cash premiums for 10ppm gasoil fell to 78 cents a barrel to Singapore quotes, from 82 cents a barrel on Monday. There has been an uptick in shipments from China and India, which is affecting sentiment towards additional short-term supplies in the region.
China’s August diesel exports were 1.58 million tonnes, the highest since June. That compared with 1.54 million tonnes in July. India’s diesel exports in August rose 14.5 percent to 2.84 million tonnes from July.
Cash discounts for jet fuel widened to 25 cents a barrel to Singapore quotes, compared with a discount of 14 cents on Monday
The October crack is nevertheless higher at $ 15.80 / bbl with the 10 ppm crack at $ 16.60 /bbl. The regrade has recovered to -$ 0.50 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s fuel oil market extended gains on Tuesday as expectations of tighter arbitrage flows into Asia continued to fuel bullish sentiment over the near term.
The Oct/Nov time spread for 380-cst fuel oil widened its backwardation to $5.75 a tonne on Tuesday, up from $4.75 a tonne in the previous session and its highest since Aug. 24. Similarly, 380-cst cash premiums rose for a second session straight to $6.20 a tonne to Singapore quotes, up from $5.90 on Monday and its highest since Aug. 10.
The October 180 cst crack is higher at -$ 3.75 / bbl with the visco spread opening out $ 1.20 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to report 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.