Crude Oil
The market continued its fall over the last two days as it digested the impact of Saudi Arabia and Russia raising production. Brent crude futures fell $1.07 to settle at $75.39 /bbl. U.S. West Texas Intermediate (WTI) crude futures dropped $1.15 to settle at $66.73 /bbl.
Oil prices were also impacted by falling stock markets and a stronger US dollar as the Feds have signalled an imminent rate hike. Markets will look at the API data being released late today afternoon (due to Monday holiday).
In their research report, Goldman Sachs commented that this lifting of quotas will merely replace the oil production lost by Venezuela and will have the additional impact of reducing spare capacity. Hence, they have maintained their price outlook of $ 82.50 for Brent in the third quarter of the year.
The oil ministers of Saudi Arabia, UAE and Kuwait will meet on Saturday to discuss OPEC matters. This comes after Saudi Arabia and Russia announced plans to revive oil production to make up for shortfalls from countries including Venezuela.
Separately, Ecuador’s oil minister said he would argue to keep oil cuts in place during the June OPEC meeting. He added that the recent fall in oil prices due to comments by Russia and Saudi Arabia are likely to be transient and that geopolitical risks will continue to influence oil prices through 2018.
Naphtha
While markets were closed on Tuesday, there is not much news to report. Market demand appears strong with Indian cargoes attracting cash premiums not seen since 2014.
The June crack has dropped to -$ 0.25 / bbl
Gasoline
Asia’s gasoline crack continued to drop on Monday settling at $9.41 a barrel, its lowest since May 16. This is however just 5 cents lower than Thursday and over 40% higher than a year ago.
The June crack has also dropped to $ 11.05 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Both gasoil and jet appeared week during trading on Monday as premiums dropped. Traders explained this as due to expectations of additional supplies as refineries return from turnarounds.
The June crack is lower at $ 15.35 / bbl with the 10 ppm crack at $ 16.20 /bbl. The regrade has dropped to $ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front month Fuel Oil crack had firmed on Monday. The 380 cSt crack to Brent had narrowed to – $ 10.60 / bbl from $ 11.45 /bbl on Friday
The tight fuel oil market in Singapore also improved the arbitrage spread to $ 16 /MT.
The June 180 cst crack is higher at -$ 3.90 / bbl. The visco spread is unchanged at $ 1.60/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
After several days of testing $ 20/bbl, Jet and 10 ppm Gasoil cracks for 2019 have receded from those levels. However, it is too early to say that markets will drop off.
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.