Crude prices rebounded as indications emerged that the production cuts may not be lifted as dramatically as thought earlier. Brent crude futures gained $2.11 to settle at $77.50 /bbl. U.S. West Texas Intermediate (WTI) crude futures gained much less i.e. $1.48 to settle at $68.21 /bbl.
A Gulf source familiar with the thinking of Saudi Arabia said OPEC and its allies aim to continue their agreement to cut oil output by the end of this year but are ready to make gradual adjustments to offset any supply shortfall. This was read by the market as a distant cry from the initial assumptions.
In the meanwhile, measures against Iran are slowly beginning to take shape and show impact. Global insurers are warning customers about doing business with Iran. Some shipping lines have said they would not take new bookings for Iran.
Reliance Industries, one of the largest refiners in India have reportedly told Iran that they will not be purchasing oil from them post November. For the remaining period of supply, they have asked NIOC to supply oil in vessels owned by the National Iranian Tank Company (NITC). In 2017, Reliance purchased 67 kbpd of oil from Iran.
The API data provided some reprieve for consumers as crude oil stocks built, contrary to market expectations. While gasoline stocks drew more than expected, the build in distillate stocks would also have some relief on a stressed distillate inventory level. The official DOE data will be released later today.
Asia’s naphtha crack fell to a nearly two-week low of $106.90 a tonne as demand was mostly muted following a flurry of spot deals recently. There were, however, several outstanding tenders from refiners to sell June cargoes. KPC was looking to sell 25,000 tonnes of full-range naphtha for June 20-21 loading through a tender which closes late on Wednesday. KPC has been seen offering more naphtha for May and June loading this year than it had for earlier months in the year.
The June crack has dropped to -$ 0.95 / bbl
Asia’s gasoline crack fell for a fifth straight session on Wednesday, to $8.67 a barrel, the lowest since May 16 as seasonal demand was offset by higher oil prices and more consumers turning to efficiency vehicles.
The number of electric cars, including battery-electric, plug-in hybrid electric and fuel cell electric passenger light-duty vehicles, increased by 57 percent last year to a record high of 3.1 million, the International Energy Agency (IEA) said in a report.
In the meanwhile stocks in Fujairah dropped by 1.75 million barrels to 5.75
The June crack has plummeted to $ 10.35 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash premiums for 10ppm gasoil inched higher on Wednesday amid steady demand, while cash differentials for jet fuel gained after dipping to a two-week low in the previous session. The overall middle distillate market would likely remain firm in the near-term, helped by strong summer demand, but prospects of additional supply from refineries returning from seasonal turnarounds weighed on sentiment. Cash differentials for gasoil with 10 ppm sulphur content rose to 45 cents a barrel to Singapore quotes on Wednesday, compared with 44 cents on Monday.
Meanwhile, cash premiums for jet fuel rose to 19 cents a barrel to Singapore quotes, up from 17 cents a barrel on Monday. Jet premiums have come down notably over the last one month, but Asian jet fuel buyers are still paying the highest premiums for this time of year in 10 years as new and expanded airports in the region have pushed consumption to new highs.
Middle distillates inventories in the Fujairah Oil Industry Zone (FOIZ) slipped about 14 percent from a week ago to 2.3 million barrels in the week ended May 28. The 367,000-barrel weekly decline in middle distillate stocks marks the first week of inventory drawdown after four straight weeks of builds in the Fujairah oil hub.
The June crack is lower at $ 14.95 / bbl with the 10 ppm crack at $ 15.80 /bbl. The regrade has improved to $ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
The second-month East-West arbitrage spread climbed to near seven-month high on Wednesday but arbitrage opportunities from Northwest Europe to Singapore remained limited amid firmly backwardated market structures in Rotterdam and Singapore.
Rising freight costs, in part fuelled by rising bunker costs, as well as firm seasonal demand for European fuel oil supplies from the Middle East also helped cap arbitrage opportunities.
Reflecting tightening prompt supplies, cash premiums of 180-cst and 380-cst fuel oil in Singapore climbed to fresh multi-week highs on Wednesday amid elevated deal values and stronger buyer bids for spot cargoes of both fuel oil grades.
Fujairah Oil Industry Zone (FOIZ) fuel oil inventories fell by 482,000 barrels to 8.72 million barrels in the week to May 28. Fujairah fuel oil inventories were weighed down by shipments to Pakistan as well as firm demand for power generation for cooling, particularly in Saudi Arabia. Compared to the same time last year, Fujairah fuel oil inventories were 14 percent lower
The June 180 cst crack is higher at -$ 3.80 / bbl. The visco spread is unchanged at $ 1.60/bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We unfortunately do not have updates on long dated prices for today.
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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.