Crude Oil
Oil prices fell on Friday after a volatile session. Brent futures dropped 83 cents to settle at $61.91 a barrel, while WTI crude fell 50 cents to settle at $55.91/bbl.
Brent fell 3.7% for the week, its biggest weekly loss since early August. WTI lost 3.6%, its steepest loss since mid-July.
Crude futures fell along with other higher-risk assets after news the U.S. government is considering the possibility of delisting Chinese companies from U.S. exchanges. The move would be a radical escalation of trade tensions between the U.S. and China.
In China, industrial companies reported a contraction in profits in August. However, China’s factory activity unexpectedly expanded at the fastest pace in 19 months in Sep’19; The Caixin/Markit Manufacturing PMI for Sep’19 rose to 51.4 from 50.4 in Aug’19 as plants ramped up production and new orders rose.
Key oil freight rates from the Middle East to Asia rocketed as much as 28% on Friday in the global oil shipping market, spooked by U.S. sanctions on units of China’s COSCO for alleged involvement in ferrying crude out of Iran. The COSCO vessels account for about 7.5% of the world’s fleet of supertankers.
Emerging details related to the Trump impeachment inquiry also helped to dent demand sentiment. In an indication of future production,
U.S. energy firms reduced the number of oil rigs this week, and for a record 10th month in a row. Drillers cut six oil rigs in the week to Sept. 27, bringing the total count down to 713, the lowest since May 2017.
Money managers cut their net long U.S. crude futures and options positions in the week to Sept. 24 by 8,199 contracts to 212,561, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Naphtha
Asia’s naphtha crack ended the week at $53.68 a tonne, its highest since Sept. 17, on stronger fundamentals after attacks on Saudi Arabia’s oil facilities about two weeks ago.
Easing oversupply and fresh demand this week from Taiwan, Japan and South Korea benefited Kuwait in term-deal talks that started in Singapore on Monday. South Korea’s LG Chem on Thursday bought naphtha for the first half of November at a premium between $12 and $13 a tonne to Japan quotes on C&F basis, representing the highest premium it has paid since 2018. This came in the same week that Formosa, Hanwha Total, Lotte Chemical, GS Caltex and Mitsui Chemicals were all snapping up cargoes at prices not seen since first-half of 2018.
The October crack is higher at – $ 4.95 / bbl.
Gasoline
No fresh news on the gasoline markets. Gasoline stocks in ARA fell by 79 KT to 986 KT.
The October crack is higher at $ 7.65 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil rose to 35 cents a barrel to Singapore quotes on Friday, compared with 32 cents per barrel on Thursday.
Gasoil stocks in ARA rose by 49 KT to 2.79 million tonnes.
Cash premiums for jet fuel were at a premium of 20 cents a barrel to Singapore quotes on Friday, compared with a 22-cent premium on Thursday.
The October crack for 500 ppm Gasoil is higher at $ 17.75 /bbl with the 10 ppm crack at $ 18.45 / bbl. The regrade is at + $ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high-sulphur fuel oil slipped on Friday but gained over the week as high-sulphur marine fuel supplies remain in short supply as the industry braces for new global rules to use cleaner fuels from 2020. Front-month time spreads, 380-cst cash premiums and the barge crack were all lower on Friday.
Fuel Oil stocks in ARA rose marginally by 9 KT to 1.34 million tonnes.
The October 180 cst crack has collapsed to -$ 8.10 / bbl with the visco spread at $ 1.30 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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.