Crude Oil
Oil prices rose more than 1 percent on Wednesday supported by a drawdown in U.S. crude and gasoline stocks and reduced Iranian crude shipments. Brent crude jumped $1.19 to settle at $77.14, after touching $77.41, its highest since July 11. U.S. oil settled 98 cents higher at $69.51 a barrel, after touching $69.75, its highest since Aug. 7.
In Venezuela, where production has halved since 2016, the state-run oil firm PDVSA said on Tuesday it had signed a $430 million investment agreement to increase production by 640,000 bpd, although some analysts doubted whether this investment would go through given ongoing instability.
A ceasefire has been declared in Libya, after days of fighting between Tripoli and Tarhouna armed groups. The fighting began three days ago and was ceased Wednesday midnight in Libya.
The DOE reported strong draws in crude and products. While the market was expecting a significantly lower draw than the 2.6 million reported, the market was expecting builds in products.
The crude draw, which came inspite of a drop in refinery run rates from 98.1% to 96.3%, was mainly due to a jump of 625 kb/d in exports. What was extremely supportive for prices was the fact the product draws were mainly due to significant jump in demand with an increase of around 450 kb/d and 370 kb/d for gasoline and distillate respectively. The details can be seen in the Material Balance table below.
For detailed charts on US DOE statistics please click here
Naphtha
Asia’s naphtha crack rose 5.4 percent to reach a four-session high of $98.43 a tonne on Wednesday after falling close to a six-week low on Monday. Strong demand for term cargoes by buyers this week and last to cash in on falling spot prices caused by high supplies has given the market some support. Spot prices for open-specification naphtha scheduled for first-half October delivery to Yeosu, South Korea, flipped to discount levels on Tuesday.
The September crack has improved to -$ 0.25 /bbl
Gasoline
Asia’s gasoline crack fell to $7.74 a barrel, the lowest since Aug. 6 due to ample supplies. Japan’s gasoline inventories rose 400,000 barrels to 9.77 million barrels in the week to Aug. 25 but this was lower than stock levels from a year ago. Light Distillate stocks in Fujairah rose by 374 kb to 5.2 million barrels. However, stocks are still 23% lower than the previous year.
The September crack is higher at $ 9.15 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s 10 ppm gasoil crack fell 1 cent to $16.49 a barrel, trimming some of the previous sessions gains when the value rose to more than a three-month high on strong demand.
Japan’s kerosene stocks rose 890,000 barrels to 13.34 million barrels in the week to Aug. 25 but this was still lower compared to inventories from a year ago, official data showed. Middle Distillate stocks in Fujairah rose marginally to 3.53 million barrels. This is around 10% higher than the level last year.
The September crack is higher at $ 15.90 / bbl with the 10 ppm crack at $ 16.70 /bbl. The regrade is steady at – $ 0.25 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst barge crack to Brent crude edged slightly higher on Wednesday, snapping nine straight sessions of declines.
The September 380-cst barge crack to Brent crude climbed to about -$10.08 a barrel, up from a near three-month low of – $10.64 a barrel on Tuesday.
Fuel oil inventories at Fujairah plummeted 17 percent to a a near five month low of 7.4 million barrels. This is about 31% lower than the previous year.
The September180 cst crack is higher at -$ 4.05 / bbl with the visco spread at $ 1.15 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Cal-19 Middle Distillates continue to firm up. We shall continue with our policy of scaling up hedging at appropriate levels should they continue firming. For now, targets are $ 18.75 in Jet and $ 18.50 in 10 ppm gasoil.
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.