Crude Oil
Oil prices fell 3% on Friday after U.S. President Donald Trump again pressured OPEC to raise crude production. Brent crude futures settled at $72.15 a barrel, down $2.20. WTI crude futures ended at $63.30 a barrel, down $1.91.
Brent was flat on the week after rallying for four weeks in a row. WTI saw a 1.2 percent weekly loss, breaking its six-week bull run.
Trump told reporters on Friday that he had called OPEC and told the cartel to lower crude prices, without identifying who he spoke to, or if he was speaking about previous discussions with OPEC officials. Traders said Trump’s comments, despite lacking specifics, were enough of a catalyst to spur investors to take profits after a long bull run that had pushed prices to six-month highs.
Traders also said Friday’s selloff was in part due to rumors that Washington could grant China an exemption allowing it to keep buying Iran’s oil, which would increase available worldwide supply. Two Trump administration officials refuted the rumors, saying neither a wind-down period nor a short-term waiver on China’s oil purchases from Iran are being contemplated to their knowledge.
The market pared some losses after U.S. oil drillers this week cut the most rigs in over three months, removing 20 rigs to a total of 805 rigs, as independent producers follow through on plans to cut spending on new drilling and completions.
Naphtha
Asia’s naphtha crack fell for a third day to end the week at $54.85 a tonne, its lowest since Monday, but spot premiums were slightly higher as buyers emerged for June fuel.
South Korea’s YNCC bought a cargo for arrival at Yeosu in the first half of June at a premium of about $4.50 a tonne to Japan quotes cost and freight (C&F). This was 50 cents higher than its purchase on April 4 for cargoes scheduled for arrival in the second half of May. Japan’s Mitsubishi Chemical also bought naphtha on Friday but for delivery in the second half of June. It had paid a premium in the low single digits to Japan C&F quotes, but this was pegged to a 45-day price formula rather than the usual 30 days. Taiwanese end-users Formosa Petrochemical and CPC were also seeking naphtha.
Industry sources said that the end of waivers on Iranian sanctions could lead to SK Energy and Hanwha Total buying more naphtha in the absence of South Pars.
The May crack is higher at – $ 5.25 /bbl
Gasoline
No Fresh news on the gasoline market.
ARA Gasoline inventories dropped by 44 KT to 923 KT, a third continuous decline in stock levels.
The May crack is higher at $ 7.45 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10 ppm sulphur content narrowed by a cent to 15 cents a barrel to Singapore quotes on Friday.
Gasoil stocks in ARA dropped by 38 KT to 2.8 Million Tonnes. Traders said the gasoil arbitrage window to Europe was “not quite open” but some shipments were heading for Latin America. In recent months, however, a few new-build VLCCs have carried diesel from Asia towards the West on their maiden voyages.
The Gasoil EFS was around minus $13 per tonne on Friday. The arbitrage is usually profitable when the EFS trades at about minus $15-18 a tonne or below.
Cash discounts for jet fuel narrowed to 10 cents a barrel to Singapore quotes, compared with a discount of 26 cents per barrel on Thursday.
The May crack for 500 ppm Gasoil is steady at $ 11.75 /bbl with the 10 ppm crack at 12.40 / bbl. The regrade is lower at $ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Despite weaker crude oil, the front-month 380-cst high-sulphur fuel oil (HSFO) barge crack widened its discount to the Brent crude on Friday but was still on track for sharp weekly gains.
The May 380-cst barge crack was at about minus $7 a barrel against Brent on Friday, down from about minus $6.60 a barrel in the previous session. At the start of the week, the front-month barge crack had settled at a discount of minus $8.39 a barrel to Brent, its widest discount since mid-October.
ARA fuel oil inventories climbed to a 16-month high in the week ended April 24, lifted by higher net import volumes of the fuel compared to the previous week, official data released on Thursday showed.
The May 180 cst crack is weaker at – $ 1.65 / bbl with the visco spread at $ 1.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The spike in fuel oil cracks notwithstanding the jump in stock to multi month highs is a bit baffling. We will add a tranche of the July crack at – $ 0.60/bbl.
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.