Crude Oil
Oil prices rose nearly 2% on Wednesday after a larger-than-expected decline in U.S. crude stockpiles. Brent crude futures settled 98 cents higher at $ 60.49 /bbl. WTI crude futures settled 85 cents higher at $55.78 /bbl.
The dollar rallied as Prime Minister Boris Johnson moved to suspend Britain’s parliament for more than a month before Brexit, enraging opponents and raising the stakes in the country’s most serious political crisis in decades.
Concerns about the impact of the U.S.-China tariffs war on demand also kept oil prices from rising more. The Trump administration on Wednesday made official its extra 5% tariff on $300 billion in Chinese imports and set collection dates of 1 Sep’19 and 15 Dec’19, prompting hundreds of US retail, footwear, toy and technology companies to warn of price hikes.
DOE data
U.S. crude stockpiles fell sharply last week as imports dropped, plummeting 11.1 million barrels, compared with expectations for a 2-million barrel draw. The draw seems to have been caused by a sharp drop in imports to below 6 mbpd. and then exacerbated by an increase in exports to over 3 mbpd
Gasoline and Distillate stocks also drew, the latter significantly so. The Gasoline draw does not seem to be corroborated by our Material Balance statement below which suggests a significant build. Having said that the gasoline demand figure of 9.9 mbpd augurs well for crude demand.
The draw in distillates seems to be due to strong demand, both local and international. Our material balance statement suggests that the draw is understated.
Naphtha
Asia’s naphtha crack recovered $1.67 to reach a two-session high of $13.85 a tonne on Wednesday after tanking to a 10-week low in the previous session as emerging spot demand gave the market support.
The September crack is higher at -6.75 / bbl.
Gasoline
No fresh news on the gasoline markets. Gasoline stocks in Fujairah plummeted by 1.8 million barrels to 6.5 million barrels. This is their lowest level in nearly a year.
The September crack is higher at $ 7.15 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for 10 ppm gasoil were unchanged on Wednesday with no physical deals in the Singapore trading window but traders expect the market to get a major boost in coming months as shippers switch to cleaner marine fuels.
Cash premiums for jet fuel climbed to 10 cents a barrel to Singapore quotes on Wednesday, against a premium of 8 cents a barrel on Tuesday.
The September crack for 500 ppm Gasoil has jumped to $ 15.85 /bbl with the 10 ppm crack at $ 16.70 / bbl. The regrade is at + $ 0.50 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Buying interest for physical cargoes high-sulphur fuel oil (HSFO) continued to firm in the Singapore trading window, propelling the 380-cst HSFO cash premium to fresh record high. In a sign of scarce supplies, the elevated buyers’ bids for HSFO cargoes were met with a near absence of suppliers that willing to offer cargoes of the fuel. The cash premium for 380-cst HSFO soared to a record high of $39.30 per tonne to Singapore quotes on Wednesday, up 27% from the previous record of $30.88 per tonne on Tuesday.
Backwardation also firmed on Wednesday with the 380-cst HSFO Sept-Oct time spread climbing to about $38 per tonne. The front-month 380-cst time spread was at $36.25 a tonne on Tuesday. The time spread hit a record high of $38.25 per tonne on July 31.
The September 180 cst crack is higher at – 3.90 / bbl with the visco spread at $ 1.35 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh recommendations 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.
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.