Crude Oil
Oil prices edged lower on Monday, with futures on track for the worst monthly performance since mid-2016, after Russia signaled that output will remain high and as concern over the global economy fueled worries about demand for crude. Brent crude futures fell 28 cents to settle at $77.34 a barrel. U.S. crude settled 55 cents lower at $67.04 a barrel.
Brent was on track to drop about 6.6 percent for the month. U.S. crude was on course to fall about 8.5 percent. Both were set for the steepest monthly decline since July 2016.
Russian Energy Minister Alexander Novak said on Saturday there was no reason for Russia to freeze or cut its oil production levels, noting that there were risks that global oil markets could be facing a deficit. OPEC had agreed in June to lift oil supplies, but OPEC then signaled last week that it may have to reimpose output cuts as global inventories rise.
Fund managers have cut their bullish positions in crude futures and options for four weeks in a row to their lowest since July 2017, as the demand outlook grows more uncertain.
On the supply side, Iran has started selling crude to private companies via a domestic exchange for the first time, the oil ministry’s news website reported. With just days to go before U.S. sanctions on Iran take effect, three of Iran’s top five customers – India, China, and Turkey are resisting Washington’s call to end oil purchases outright, arguing there are not sufficient supplies worldwide to replace them, according to sources familiar with the matter. That pressure, along with worries of a damaging oil price spike, is raising the possibility of bilateral deals to allow some buying to continue.
Naphtha
Asian naphtha margin also fell, hitting its lowest in nearly nine months at $58.60 a tonne as abundant supply battered the light ends market. The situation is not expected to improve for sellers any time soon, with refiners unlikely to cut runs because of demand for middle distillates and fuel oil.
The November crack is slightly higher at – $ 4.45 / bbl
Gasoline
Asia’s gasoline crack tanked for a third session to a 27-month low on Monday at $1.78 a barrel.
The November crack is unchanged at $ 3.15 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10ppm sulphur content were at $1.63 a barrel to Singapore quotes on Monday, compared with $1.83 a barrel on Friday.
Meanwhile, cash premiums for jet fuel slipped to 2 cents a barrel to Singapore quotes on Monday, compared with a premium of 9 cents on Friday..
The November crack has dropped to $ 17.05 /bbl with the 10 ppm crack at $ 17.95 /bbl. The regrade is higher at $ 0.30 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s fuel oil market resumed its steady ascent on Monday, with fuel oil cash premiums, front-month time spreads and refining margins climbing to fresh highs, as concerns over near-term supply continued to weigh.
The front-month Singapore 180 cst fuel oil crack advanced for a fourth straight session and settled at a record high of $1.61 a barrel above Dubai crude oil. The previous record of $1.60 a barrel was set on March 31, 2003.
The 380-cst fuel oil November/December time spread climbed to $9 a tonne, its highest since end-July and up from $8.50 on Friday.
Cash premiums for 380-cst fuel oil cargoes were also bid up to $8.51 a tonne to Singapore quotes, up from $7.63 a tonne on Friday, and its highest since June 2015.
The November 180 cst crack is higher at +$ 1.65 / bbl with the visco spread at $ 0.95 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to report 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.