Crude Oil
Oil prices rose for the third day in a row on Thursday after Saudi Arabia announced it was suspending shipments through the Bab El-Mandeb strait and trade tensions between the US and EU eased. Brent crude futures rose 61 cents to settle at $74.54 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 31 cents to settle at $69.61 a barrel.
Any move to block the Bab al-Mandeb, which is between the coasts of Yemen and Africa at the southern end of the Red Sea, would virtually halt oil shipments through Egypt’s Suez Canal or the SUMED crude pipeline that link the Red Sea and Mediterranean. An estimated 4.8 million barrels per day of crude oil and refined products flowed through the Bab al-Mandeb strait in 2016 towards Europe, the United States and Asia. Saudi Arabia additionally has the Petroline, also known as the East-West Pipeline, which mainly transports crude from fields clustered in the east to Yanbu for export.
In the meanwhile, Iran is said to be offering India oil cargo insurance to support sales in the face of looming US sanctions.
Naphtha
Asia’s naphtha physical crack for first-half September recovered on Thursday after easing in the previous day and was now at a seven-month high of $119.60 a tonne due to strong demand and tighter supplies.
More than 220,000 tonnes of naphtha were locked in through tenders by buyers this week for first-half September delivery.
The August crack has strengthened to $ 0.55 /bbl.
Gasoline
Asia’s gasoline crack eased 3 percent from a near two-month high from the previous session to a two-session low of $8.08 a barrel. The recent hike in the gasoline crack was more to reflect stronger demand in the West rather than in Asia where supplies were ample.
Singapore onshore light distillates stocks, which comprise mostly gasoline and blending components for petrol, for instance, were at a four-week high of 14.7 million barrels in the week to July 25..
The August crack has dropped to $ 9.60 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian cash discounts for 10 ppm gasoil narrowed for the fifth straight session on Thursday due to a slight uptick in market sentiment as the front-month time spread widened its backwardated structure.
Cash differentials for gasoil with 10 ppm sulphur content were at a discount of 1 cent a barrel to Singapore quotes, compared with a discount of 3 cents on Wednesday.
The Aug/Sept spread for 10ppm gasoil was at a premium of 12 cents per tonne on Thursday, up from 5 cents a day earlier.
Meanwhile, the cash premium for jet fuel remained unchanged on Thursday, still lingering at its strongest level in nearly two weeks as firmer aviation demand offset additional supplies in the region at the end of peak refinery maintenance season. Jet cash differentials stayed at a premium of 6 cents a barrel to Singapore quotes on Thursday.
Singapore onshore middle distillate stocks rose about 11 percent in the week to July 25 to 10.90 million barrels. This is the highest level attained in 3-1/2 months.
The August crack has improved to $ 14.30 / bbl with the 10 ppm crack at $ 15.20 /bbl. The regrade is lower at $ 0.85 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month fuel oil crack to Brent crude firmed on Thursday as Singapore inventories of the fuel plummeted to a 6-1/2-year low amid a steeply backwardated prompt market structure and after months of persistently low arbitrage supplies into the city-state.
The August 380-cst barge crack to Brent crude was trading at a discount of about $7.70 a barrel on Thursday, compared with about minus $7.90 a barrel in the previous session. The front-month fuel oil crack discount is at its narrowest since November.
Singapore’s weekly onshore fuel oil inventories fell 3.43 million barrels to 16.2 million barrels in the week ended July 25. Inventories dropped despite a jump of 17 percent in weekly fuel oil net imports into Singapore. Net fuel oil imports hit a five-week high of 1.23 million tonnes in the week ended July 25. Compared with a year ago, the latest onshore fuel oil inventories were 34 percent lower.
The August 180 cst crack has strengthed to -$ 0.65 / bbl with the visco spread at $ 1.20 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to report on the same 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.