Volume 96 / Number 149 / August 6, 2018 / Prices effective August 3, 2018 OILGRAM PRICE REPORT www.platts.com INSIDE THIS ISSUE Market analysis International crude: Forties flip to discount vs Brent 2 Americas crude: CNR shuts in heavy oil output 4 Gasoline: US to weaken as supply grows 5 Diesel: US Gulf Coast rallies to high 7 Gasoil: US backwardation deepens 7 Jet: Singapore regrade lower, exports brisk 8 Resid: Singapore stocks drop to nine-year low 16 Feedstocks: US sour VGO rallies to $13/b over crude 17 Gas liquids: Asia propane more economic than naphtha 18 Tankers: Typhoon shuts eastern China ports 18 News South Korea finds US crude cheaper than Russian grades 19 China’s CAO to focus on core business amid trade tensions 31 Heatwave forces European refiners to cut runs 31 Brazil’s Petrobras to install three new FPSOs in third quarter 32 Refinery updates 33 FORCADOS COULD GET BUMP FROM NARROWER EFS Source: S&P Global Platts -1 0 1 2 3 4 5 Aug-18 Feb-18 Aug-17 Feb-17 Aug-16 ($/b) Brent-Dubai EFS Forcados Note: Platts Brent-Dubai at London MOC m1, Forcados differential to Dated Brent Strip ■ Iran falls to 3.72 mil b/d as buyers unwind purchases ■ Venezuela continues freefall to 1.24 mil b/d OPEC produced 32.66 million b/d in July, a 340,000 b/d rise from June, including newest member the Republic of Congo, according to the latest S&P Global Platts survey of industry officials, analysts and shipping data. Saudi Arabia, OPEC’s largest member, produced 10.63 million b/d, the kingdom’s highest since August 2016, when it produced its record 10.66 million b/d, according to Platts survey archives. After the survey was published, however, a Saudi OPEC output surges on Saudi crude boost London—Saudi Arabia pumped close to its all-time high in July and several of its OPEC brethren posted their largest output figures in more than a year and a half, as the bloc appears to be following through on its agreement to unleash more barrels on the market. source said the kingdom produced less crude in July and supplied 10.38 million b/d to the market. The country produced 10.29 million b/d in July, the source said, down from a self-reported figure of 10.49 million b/d for June. The new figure indicates that Saudi Arabia may have pulled barrels out of storage to supply the market with more crude than it produced. OPEC is set to reveal its July production figures in its closely watched monthly oil market report August 13. According to Platts’ survey, Saudi Arabia’s Gulf allies Kuwait and the UAE pushed their output to their most (continued on page 32) New York—Crude futures fell Friday on rising OPEC and Russian output and concerns that a trade dispute between the US and China will affect demand. October ICE Brent settled 24 cents lower at $73.21/b, while September NYMEX crude settled 47 cents lower at $68.49/b. OPEC produced 32.66 million b/d in July, up 340,000 b/d from June, according to an S&P Global Platts survey Friday, as increases from Saudi Arabia, Kuwait, Iraq, Algeria and the UAE offset declines from Libya and Venezuela. Russia’s crude output climbed nearly 150,000 b/d in July, the energy minister said Thursday, largely in line with Moscow’s late-June agreement with OPEC. Russian output is now just 15,000 b/d below the record high of 11.23 million Crude futures fall on higher OPEC supply, US-China trade spat b/d set in October 2016. “Rising Saudi Arabian and Russian oil supply, coupled with concerns about demand due to the further escalating trade conflict between the US and China, the two largest oil consumer countries, is weighing on the [Brent] price,” Commerzbank analysts said in a note Friday. Weekly rig data reported by Baker Hughes Friday did little to move the market. US rigs fell by four to 1,044 this week, while the Permian oil rig count was unchanged at 479. The Permian count has lingered between 473 and 479 since the end of May, reflecting a slowdown in activity on tight pipeline takeaway capacity, and suggesting production growth will slow. (continued on page 33)
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OIlGraM PrICe rePOrt · 2018-11-16 · Volume 96 / number 149 / august 6, 2018 / Prices effective august 3, 2018 OIlGraM PrICe rePOrt InsIde thIs Issue Market analysis International
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Volume 96 / Number 149 / August 6, 2018 / Prices effective August 3, 2018
OILGRAM PRICE REPORT
www.platts.com
InsIde thIs Issue
Market analysis
International crude: Forties flip to discount vs Brent 2Americas crude: CNR shuts in heavy oil output 4Gasoline: US to weaken as supply grows 5Diesel: US Gulf Coast rallies to high 7Gasoil: US backwardation deepens 7Jet: Singapore regrade lower, exports brisk 8Resid: Singapore stocks drop to nine-year low 16Feedstocks: US sour VGO rallies to $13/b over crude 17Gas liquids: Asia propane more economic than naphtha 18Tankers: Typhoon shuts eastern China ports 18
News
South Korea finds US crude cheaper than Russian grades 19China’s CAO to focus on core business amid trade tensions 31Heatwave forces European refiners to cut runs 31Brazil’s Petrobras to install three new FPSOs in third quarter 32Refinery updates 33
FORCADOS COULD GET BUMP FROM NARROWER EFS
Source: S&P Global Platts
-1
0
1
2
3
4
5
Aug-18Feb-18Aug-17Feb-17Aug-16
($/b) Brent-Dubai EFSForcados
Note: Platts Brent-Dubai at London MOC m1, Forcados di�erential to Dated Brent Strip
■■ Iran falls to 3.72 mil b/d as buyers unwind purchases■■ Venezuela continues freefall to 1.24 mil b/d
OPEC produced 32.66 million b/d in July, a 340,000 b/d rise from June, including newest member the Republic of Congo, according to the latest S&P Global Platts survey of industry officials, analysts and shipping data.
Saudi Arabia, OPEC’s largest member, produced 10.63 million b/d, the kingdom’s highest since August 2016, when it produced its record 10.66 million b/d, according to Platts survey archives.
After the survey was published, however, a Saudi
OPEC output surges on Saudi crude boostLondon—Saudi Arabia pumped close to its all-time high in July and several of its OPEC brethren posted their largest output figures in more than a year and a half, as the bloc appears to be following through on its agreement to unleash more barrels on the market.
source said the kingdom produced less crude in July and supplied 10.38 million b/d to the market.
The country produced 10.29 million b/d in July, the source said, down from a self-reported figure of 10.49 million b/d for June. The new figure indicates that Saudi Arabia may have pulled barrels out of storage to supply the market with more crude than it produced.
OPEC is set to reveal its July production figures in its closely watched monthly oil market report August 13.
According to Platts’ survey, Saudi Arabia’s Gulf allies Kuwait and the UAE pushed their output to their most
(continued on page 32)
New York—Crude futures fell Friday on rising OPEC and Russian output and concerns that a trade dispute between the US and China will affect demand.
October ICE Brent settled 24 cents lower at $73.21/b, while September NYMEX crude settled 47 cents lower at $68.49/b.
OPEC produced 32.66 million b/d in July, up 340,000 b/d from June, according to an S&P Global Platts survey Friday, as increases from Saudi Arabia, Kuwait, Iraq, Algeria and the UAE offset declines from Libya and Venezuela.
Russia’s crude output climbed nearly 150,000 b/d in July, the energy minister said Thursday, largely in line with Moscow’s late-June agreement with OPEC. Russian output is now just 15,000 b/d below the record high of 11.23 million
Crude futures fall on higher OPEC supply, US-China trade spatb/d set in October 2016.
“Rising Saudi Arabian and Russian oil supply, coupled with concerns about demand due to the further escalating trade conflict between the US and China, the two largest oil consumer countries, is weighing on the [Brent] price,” Commerzbank analysts said in a note Friday.
Weekly rig data reported by Baker Hughes Friday did little to move the market. US rigs fell by four to 1,044 this week, while the Permian oil rig count was unchanged at 479. The Permian count has lingered between 473 and 479 since the end of May, reflecting a slowdown in activity on tight pipeline takeaway capacity, and suggesting production growth will slow.
(continued on page 33)
Prices effective August 3, 2018OilgrAm Price rePOrt
Crude price assessmentsAsia Pacific/Middle East spot crude assessments 20International 21Asia 21North Sea 21West Africa 21London 22Mediterranean 22Canada 22Platts Euro denominated crude oil assessments 22United States 23US domestic crude assessments London close 23US crude assessments Singapore close 23Canadian spot crude assessments 24Crude oil postings 24Latin America crude 24Daily OPEC basket price 24Spot tanker rates 25Platts futures assessments Singapore MOC 25Platts futures assessments 25Futures settlements 26Five-Day Rolling Averages 27US wholesale posted prices effective Aug 3 28Commitments of traders as of Jul 31 30
MArkEt ANAlySIS
INtErNAtIONAl CrUdE
Forties flip to discount vs BrentNew signs of an arbitrage east emerged in the North Sea crude market Friday, with a VLCC reportedly booked for a late August voyage east, as Forties sank to a discount to Brent.
Forties fell to a 16 cents/b discount to Brent, down 79 cents/b on the day.
Shipbrokers linked Totsa with the Athenian Freedom VLCC for an August 23-26 voyage from the North Sea to South Korea at a $4.2 million lump sum. Total could not be reached for comment.
In the derivatives market, Brent Contracts for Difference flattened over late August-early September dates.
August 20-24 to September 3-7 CFDs traded at parity, compared with a 15 cents/b contango Thursday afternoon, while the rest of the curve remained in a contango.
Market participants said North Sea’s sweet grades were trading at a slow pace, while distillates rich grades were heard to be faring better, in light of healthy distillates cracks.
“Sweet seems very slow to move so far,” a source said.Another source reported healthy and steady appetite
for Norway’s Grane crude.“Urals is not plentiful, Iranian sanctions kicking in and
the fuel oil and distillates cracks being excellent means that Grane has value,” the trader said, reporting abundant supplies of light crude, together with rising imports of US crude and a meager gasoline crack relative to distillates. “
A source pegged September arrivals around one Aframax per day.
“June exports were by far the highest, although most is destined for Asia.”
An estimated 6.4 million barrels of Ekofisk crude loaded out of the UK’s Tees terminal over the course of July, according to S&P Global Platts trade flow software cFlow.
All barrels leaving Tees in July remained in Europe, with increased volumes heading to the Mediterranean on the back of Libyan export outages.
The force majeure on Libyan exports in June saw Mediterranean refiners seek alternative sources of supplies
from the North Sea.Two Aframaxes left Tees for Italy and Spain, respectively
in early July, while a third Aframax followed mid-July and was taken into an Italian short.
Only one Aframax – amounting to 9% of total July loadings – was absorbed into the UK, compared with 30-50% of volumes in previous months.
However, a large portion of the July program is yet to discharge, according to cFlow. Indeed, an estimated 53% of July Ekofisk loadings remained on vessels anchored off UK coasts Friday.
CPC Blend’s Aug loading program lowerKazakhstan’s CPC Blend’s differential decreased just as the grade’s loading program is set to decrease in August.
An August-loading Aframax of CPC Blend was heard at minus $1.95-$1.75/b to Dated Brent.
Suezmaxes were heard to be 15 cents/b lower.BP hit an OMV bid for an August 24-28 loading CPC
Blend cargo basis CIF Augusta in the Platts Market on Close assessment process at Dated Brent minus $1.95/b.
The final August loading program for CPC Blend is currently scheduled to be 4,624,550 mt, down 67,000 mt from a preliminary schedule mid-July, according to a copy of the schedule seen by S&P Global Platts Friday.
Average daily loadings in August are now set to come in
FORTIES DIFFERENTIAL TO DATED BRENT FALLS HARD
Source: S&P Global Platts
-1.0
-0.5
0.0
0.5
1.0
Aug-18Jun-18Apr-18Feb-18
($/b)
Note: Forties di�erential to Dated Brent falls hard
Prices effective August 3, 2018OilgrAm Price rePOrt
at 1,163,596 b/d, down 16,859 b/d from the 1,180,455 b/d expected in the provisional schedule.
The August program has 18 Suezmaxes scheduled, down one cargo from the preliminary program, and 25 Aframaxes, an increase of one.
Looking at other grades in the Mediterranean light crude complex, Libya’s Mellitah was heard to be in good supply. “Libya’s just pumping oil at the moment,” one trader said. The grade, which has an API of about 43, was being marketed near its OSP value, around minus $1.65-$1.70/b to Dated Brent basis FOB, putting it within range of CPC, the same trader said.
Also in Libya, ships were heard to be loading El-Sharara crude.
The grade is officially still under force majeure, but unofficially vessels were said to have been successfully taken into the port Friday.
The increase in Libyan output was not only putting pressure on CPC but other grades in the region like Saharan Blend, said sources, with levels heard around Dated Brent minus 50 cents/b on an FOB basis.
From a refinery perspective, margins were heard to be good around Europe, but sour grades were heard to be popular among European refiners due to the strength in fuel oil markets.
Urals weaker under competitive offersUrals in Northwest Europe Russia’s Urals prices continued to drop, sinking around 30-40 cents/b from trades seen in earlier in the week.
Traders said refineries in the Mediterranean had a wide selection of crudes being offered on the sour end of the barrel, including unsold Aframaxes and Suezmaxes of Urals, Iraq’s Basrah Light, as well as some US crudes like Mars.
With refinery margins favoring sour crudes, sellers had originally anticipated increased demand and higher values, but as a result of the more than ample availability, the market had been relatively flat and trending weaker, said sources.
Levels for Basrah Light were heard trading at a discount
of 40-30 cents/b versus its August official selling prices.Sources said additional Basrah volumes were expected
to be offered into the region during the month, as production volumes had grown, while similarly the Urals program loading out of Novorossiisk in August had seen higher volumes, particularly among Suezmaxes, with nine scheduled for the month.
These higher exports followed the lifting of the production cap by OPEC and non-OPEC countries in June.
In Northwest Europe, the market was mainly traded out to the third decade, although recent sales had dropped from highs near Dated Brent minus $1.20/b seen earlier in the week.
This came as major buyers such as Unipec and Total had stepped back in recent sessions, with Total seen offering a 100,000 mt cargo, basis CFR Rotterdam, loading August 24-28 in the MOC Friday.
Gunvor bought the cargo from Total at Dated Brent minus $1.60/b.
Litasco was also offering a 100,000 mt Urals cargo, basis CFR Rotterdam, loading August 20-24, down to Dated Brent minus $1.45/b, which was left outstanding at the end of the MOC.
ESPO could fall after Aramco cuts OSPsThe market in Asia was digesting Saudi Aramco decreasing its OSPs for September.
Aramco dropped the OSPs by 40-70 cents/b for all its crude grades, according to a company notice seen by S&P Global Platts.
“With Saudi OSPs [cuts], I would expect unsold ESPO to be trading down to Dubai plus $1.50s/b to $1.70s/b level,” a market source said.
Far East Russian ESPO crude barrels have been seeing downward pressure on premiums due to a relatively expensive underlying Dubai basis.
Dubai crude and the grades linked to it are perceived as relatively expensive to Brent-linked barrels due to a narrowing Brent/Dubai Exchange of Futures for Swaps
spread, traders said.The September Brent/Dubai EFS value as of 4:30
pm Singapore time (0830 GMT) ended the month down $2.45/b from $3.67/b on July 2 to $1.22/b as of July 31, Platts data showed.
The first trading day of August saw October EFS pegged at $1.99/b at the Singapore close of trading, which then quickly whittled down to $1.62/b the same time on August 2. As of 0700 GMT Friday, the October EFS was pegged at $1.79/b.
China independents increase July importsCrude oil imports by China’s independent refineries in eastern Shandong province, as well as Hebei Xinhai Chemical and Henan Fengli Petrochemical, rebounded by 27.3% from a 20-month low in June to around 7.36 million mt in July, or 1.74 million b/d, according to a monthly survey by S&P Global Platts.
Imports were also 5.6% higher year on year.The rebound was broadly within market participants’
expectations, as imports in June were affected by restrictions on port operations because of the Shanghai Summit.
Over January-July, total imports by the surveyed refineries rose marginally by 1.7% to 57.23 million mt, Platts data showed.
The total crude import volume in July included parcels that arrived at and completed discharge operations at the ports in Shandong and Tianjin in the month, as well as cargoes that have arrived over the past months, but only completed offloading in July.
Apart from those that have completed discharge operations, another 1.94 million mt of crude onboard 19 vessels were still waiting outside port limits as of July 31. In comparison, there is usually around 2 million mt of crude waiting to be discharged towards the end of the month.
Cargoes waiting outside port limits as of July 31 included Qingyuan Petrochemical’s 258,000 mt of Cabinda crude and 130,000 mt of Plutoino crude, which had arrived at the ports in mid and end May. The 130,000 mt cargo of
Prices effective August 3, 2018OilgrAm Price rePOrt
Plutoino crude onboard Mercury Hope has since been discharged on August 1.
Despite higher crude imports, feedstock inventories at major ports in Shandong fell 13% from the record high in June to 4.71 million mt as of July 26, data from Chinese information provider JLC showed.
Major ports in Shandong refer to Qingdao, Dongjiakou, Longkou, Laizhou, Rizhao, Dongying and Yantai.
Around 408,000 mt of crude was received by two trading companies – Vitol and PetroChina’s trading arms that supply to independent refineries – down from 466,000 mt imported by three trading companies in June.
The number of companies taking in crude last month fell to 21, compared with 24 in June, for a total of 25 crude grades compared with 23 grades in June.
In July, 19 independent refineries which hold crude quotas – including Hebei Xinhai Chemical and Henan Fengli Petrochemical – received 6.95 million mt of imported crude, compared with 5.31 million mt by 21 independent refineries in June, Platts data showed.
Some of this volume received by the refineries can be resold to other independent refineries, including non-quota holders.
Qirun, Chambroad run out of quotasAs of end-July, crude imports by Qirun Petrochemical and Chambroad Petrochemicals have surpassed each of their import quota allocations.
Qirun has imported around 2.25 million mt of crude over January-July, about 47,000 mt above its allocation.
Chambroad has imported about 14,000 mt above its allocation of 3.31 million mt, and its total imports over January-July was about 107% higher year on year.
In addition to those that have already run out of quotas, another two refineries are likely to run out of quotas soon, based on their current monthly imports.
The two are Luqing Petrochemical and Hongrun Petrochemical, with around 416,000 mt and 405,000 mt of quotas left as of end-July, respectively.
Malaysian premiums maintainedIn Asia’s sweet market Friday Malaysia’s September program began to clear at relatively firm premiums.
ConocoPhillips was heard to have sold via tender a Kikeh crude cargo for loading over September to an oil major at a premium of around $3.90/b to Platts Dated Brent on an FOB basis.
Loading dates were unclear, though traders said the cargo was a cross-month one and that the value for September-loading Malaysian crude oil basket grades should be around a premium of $3.50-$3.75/b to Dated Brent crude assessments on an FOB basis.
Earlier trades of Malaysian basket crudes saw Labuan being traded at a premium of around $4/b to Platts Dated Brent assessments and Miri at a premium of around $3.50/b to Platts Dated Brent, both on an FOB basis.
Premiums for MCOs have remained resilient despite what several traders have said were aggressive offers for US crudes delivered to Asia.
WTI Midland for delivery to Asia have been heard offered at a premium of around $1/b to Platts Dated Brent crude assessments on a delivered basis, with CPC Taiwan and another Southeast Asian end-user among those who have picked up cargoes recently.
Elsewhere, Malaysia’s Petronas was heard to have sold its Bergading condensate cargo for loading over September 21-30 to a regional end-user at a discount of around $1.25/b to Platts Dated Brent crude assessments on an FOB basis.
New Indonesia CP formulaAlso, in the sweet market, traders were discussing the recent changes to the Indonesian Crude Price formula.
Indonesia’s Ministry of Energy and Mineral Resources has set the Indonesian Crude Price for Minas grade lifted in July at $72.05/b, up $1.32/b from June, according to the monthly selling price notice seen by S&P Global Platts Friday.
Indonesia’s Ministry of Energy and Mineral Resources implemented a revision to its Indonesian Crude Price formula from July 1, 2018 in a bid to better reflect the
market value of the country’s flagship crude oil grades, a senior official said Thursday.
The formula, which will be implemented retroactively from July for a year, has now been revised to reflect Platts Dated Brent plus/minus an alpha, from Platts Dated Brent plus an alpha previously, the official said.
According to the ministry’s regulation on the new ICP formula issued July 30, 2018, Dated Brent is calculated based on the monthly average of the Platts benchmark price.
The alpha is calculated based on the published outright assessments of the Indonesian crude grades’ during the current month, or the average of published prices for two months consisting of the previous month and the current month.
The alpha will also consider the quality of the crude grades, trends in international crude prices and national energy security, according to the statement.
With Dated Brent in July at $74.35/b and the outright ICP for Minas set at $72.05/b, the alpha for the month is equivalent to minus $2.30/b.
Indonesia settles its monthly ICPs retroactively.A day after Pertamina canceled its condensate tender, the
company issued a sweet crude tender for 10 million barrels delivered in several cargoes over November and December.
AMErICAS CrUdE
CNr shuts in heavy oil outputOil and gas producer Canadian Natural Resources has shut in 2,900 b/d of heavy oil output in Alberta, as the benchmark Western Canadian Select grade continues to face deep discounts to WTI, company president Tim McKay said Thursday.
A total of 7,450 b/d of output was curtailed in the second quarter, but with the price margins improving for the company in July, 4,550 b/d of output restarted, McKay said in the company earnings call.
“We still continue to see a lot of volatility in the market with differentials and those [2,900 b/d] shut-in barrels are
Prices effective August 3, 2018OilgrAm Price rePOrt
not likely to come back in the near future,” he said.Early Thursday, CNR said in its earnings release that the
company took a proactive decision in Q2 to not sell marginal production in the wider spot WCS differential compared with the index WCS differential market that was caused by pipeline apportionment issues.
The lack of pipeline takeaway capacity from Western Canada has resulted in several producers actively pursuing deals with railroads to move barrels on rail or else hedging their output.
Fellow heavy oil producer Obsidian Energy said Thursday it has secured 1,000 b/d of crude-by-rail capacity to move its heavy barrels to markets in the second half of 2018, while another producer, Athabasca Oil Corporation, said Wednesday it has secured WCS differential hedges for 17,000 b/d of its oil output in the third quarter of 2018 at $16.17/b.
CNR did not disclose any hedge positions. Rather, the company is in talks with railroads to move barrels, McKay said.
“We have nothing on the plate now and are seeking opportunities. Railroads are looking for three-year contracts, but we are seeking short-term contracts,” he said.
CNR has typically not used rail to ship barrels because it has the pipeline capacity, Executive Vice Chairman Steve Laut said Thursday in the call.
“We did move 35,000 b/d in 2012. But now we have nothing on our plate [in terms of new CBR contracts],” Laut said.
WCS at Hardisty traded at WTI CMA minus $30.80/b Thursday, the lowest in more than four years.
The differential has weakened on record inventories and the prospect of plunging demand from Midwest refiners as they enter turnarounds.
sCO shipmentWhile CNR has curtailed output for heavy oil, for its
synthetic crude oil (SCO) production the company has identified 75,000 b/d to 90,000 b/d of new capacity, McKay said.
“These are step-sized projects that will be carried out in tranches of 35,000 b/d to 40,000 b/d that will start in 2020
and go 2021,” McKay said.The flagship Horizon project that completed its Phase
3B expansion early in 2018, taking capacity to 250,000 b/d, markets its SCO to refineries in the nearby Edmonton area and to the US Midwest, Laut said.
“We will continue to focus on long-life, low decline assets,” Laut said, adding that the first oil from the company’s 40,000-b/d Kirby North project is targeted for startup in Q4 2019, three months ahead of schedule.
CNR’s Q2 2018 output of SCO was 407,704 b/d, down from 431,756 b/d in the same quarter in 2017.
The decrease was due to a major planned turnaround last quarter, the company said.
Colombia to load 1.5 million barrelsColombia was scheduled to load 1.5 million barrels of Vasconia crude and 1.5 million barrels of Castilla Blend out of the port of Covenas between Friday and Tuesday, a loading program showed Friday.
Ecopetrol, Cepsa and Trafigura were lined up to load one Aframax-sized vessel each of medium-sour Vasconia , according to the program.
Meanwhile, Ecopetrol the only producer of Castilla Blend was expected to load one VLCC-sized cargo and one Aframax with such grade next week.
The Colombian oil producer was also scheduled to load 500,000 barrels of Brazilian Lula crude this weekend.
So far this year, Colombia has also imported US crudes such as Thunder Horse, Mars, LLS; Canada’s Hibernia; Russia’s Varandey, among others.
Separately, Canada-based Parex Resources awarded 500,000 barrels of Vasconia for September delivery to an undisclosed trading company, according to market sources.
According to multiple sources the deal was done at a $5.50/b discount to ICE Brent.
Platts assessed the differential for Vasconia at that level, which is up 35 cents/b to Platts Latin Brent Strip from Thursday.
A narrower spread between ICE Brent and NYMEX WTI
was seen as supportive for higher Colombian crude prices starting August.
The spread between both crude benchmark narrowed to $4.76/ Friday, according to S&P Global Platts data.
The average spread has been $5.42 so far this year.
GASOlINE
US to weaken as supply growsUnplanned turnarounds in key production areas and untenable arbitrages have tightened prompt US gasoline markets this summer, a trend that should soon end as output ramps up to capitalize on the final days of summer margins.
US gasoline strength has been most evident this week in the New York Harbor, where barge-delivered cash RBOB climbed to NYMEX September RBOB plus 6.75 cents/gal in Friday trading, up 1.25 cents/gal from the previous assessment.
“It is ripping,” a market source said.Regional traders have attributed the strength to poor
arbitrages keeping supply low.While July gasoline imports into the US Atlantic
Coast reached a 2018 high of 15.37 million barrels, market sources said shipments have slowed considerably for August.
Sources also said barrels were being taken off Colonial Pipeline in the US Southeast instead of making their way up to the New York Harbor, further tightening supply.
The arbitrage up the line has been unappealing all summer. Value of space on the gasoline-only Line 1 has been below minus 1 cent/gal since July 19 and has not been in positive territory since April.
“The Gulf Coast does not pay, Chicago is high and no imports all adds to this,” a second source said.
The arbitrage to send CBOB from the Gulf Coast to Chicago netted shippers about 1.8 cents/gal as of Thursday, compared to losing 0.50 cent/gal for the same product delivered to the New York Harbor.
Prices effective August 3, 2018OilgrAm Price rePOrt
End in sightThe current low supply situation likely won’t last long, traders have said. Most US gasoline markets are backwardated throughout August, as refinery production is expected to ramp up after a string on unplanned outages over the summer.
“[Tightness in the market] has really been a persistent issue this summer,” a third source said. “There’s been a lot of unplanned maintenance. It?s just been one thing after another.”
Refineries from Utah to Texas experienced unplanned upsets in June and July, frequently sending regional spot prices higher.
US Energy Information Administration data showed US refineries ran at an average of 95.2% of their total capacity, up 0.67% from the same average last year and up 0.94% from the prior three-year average.
In the week ended July 6, US refineries ran at 96.7% of their total capacity, the highest July weekly figure since the week ended July 24, 1998.
That strong output was mainly supported by the Atlantic Coast, as Gulf Coast runs were down slightly from last year, running at 94.6% of capacity, down from 96.3% during the year-ago month.
“It seems everyone has their ducks in a row, so barring any storm issues [the Gulf Coast] should crank out product in August,” the third source said.
Backwardation takes holdWhile US gasoline is always backwardated this time of year because RVP levels switch in September to winter-grade specifications, tight supply for prompt trading has made it especially pronounced.
The balance-month August Gulf Coast gasoline swap as of Friday morning was at 6.72-cent a backwardation to the September swap.
This backwardation will likely increase as September approaches, with the September swap differential falling if the lack of tropical activity in the Gulf of Mexico continues.
The September swap typically trades at a positive to NYMEX as a built-in hurricane premium.
In the cash market, Gulf Coast prompt CBOB traded Friday 20 points stronger than the following cycle, while prompt RBOB held a 50-point premium to its following cycle.
New York Harbor cash RBOB was backwardated by about 15 points per day throughout August, according to Friday trading.
Japan imports rare Singapore cargoJapan has imported some gasoline from Singapore in a rare move to tide over domestic market tightness stemming from refinery turnarounds and outages, market sources said this week.
The last time Japan, typically balanced on gasoline, imported gasoline from Singapore was in June 2017, for a 40,007 kiloliter (251,540 barrels) clip, according to data from Japan’s Ministry of Economy, Trade and Industry.
A Medium Range clean petroleum tanker carrying up to 35,000 mt of gasoline loaded from Natural Fuels Terminal Jetty 1 in Singapore and due to arrive in Chiba on August 9, according to market sources and data from S&P Global Platts cFlow.
Phillips 66 fixed the Nave Pyxis for a Singapore-Japan voyage, loading a cargo of gasoline over July 29, at Worldscale 160 points basis 30,000 mt. Sources said that since the tanker was expected to load up to 35,000 mt of cargo with 50% overage, the freight would equate to $13.88/mt using a flat rate of $9.34/mt for Singapore to Chiba.
Phillips 66 declined to comment on the fixture.This is an unusual move as Japan typically meets
its own gasoline demand with its domestic refineries, market sources said.
Refinery turnarounds and outages have tightened the gasoline market which bolstered domestic prices, and encouraged imports.
“The domestic premium [in Japan] is very high, so it makes sense to import,” a gasoline broker said.
Refiner Taiyo Oil is conducting a major turnaround at the
138,000 b/d Kikuma refinery in western Japan.Both crude distillation units were shut over June 8-9,
and the maintenance is expected to last until end-August. Cosmo Oil’s 100,000 b/d Sakai refinery also remained shut and is due for an upgrade in 2019.
“[Any shortfall in Japanese gasoline] should be bought from the international market, as some refineries have low production rates or are shutting down so the domestic market cannot cover a total loss from one refinery,” a source with a Japanese refiner said.
Stocks of gasoline in Japan fell by 3.3% from the previous week to stand at 9.33 million barrels in the week ended July 28, data from the Petroleum Association of Japan showed. This was down 15% from a year ago.
NWE supply tightThe European gasoline market remained strong, as tightness in the Northwest kept prices elevated.
In the paper market, the September Eurobob crack swap rose 30 cents/b to $10.40/b at the market close.
“Euro grade [gasoline] has been really tight for the past few weeks,” a source said.
The heat in the region could affect refiners and this, alongside an increase in West African demand Friday, were the latest factors contributing to the higher gasoline prices in NWE.
Refineries needed to cool their crude distillation columns amid very high temperatures in the region and some had reduced output in order to cope with the heat, although the measures appeared to be temporary and had not been widespread, said sources.
“Some refineries might have to reduce capacity by 1%-2%,” a source said, but that would have “very little impact on refinery output.”
Gasoline inventories were up slightly in the Amsterdam-Rotterdam-Antwerp hub, increasing by 3.1% to 970,000 mt (8.2 million barrels) in the week to Thursday, according to data from PJK International.
Northern European gasoline saw further demand Friday,
Prices effective August 3, 2018OilgrAm Price rePOrt
following some renewed buying interest from West Africa after a slow week of demand from the region.
Three ships – the Vela, the UACC Eagle and the Mare di Genova – were heard put on subjects Friday for trips to West Africa.
The Vela, carrying 37,000 mt of gasoline and the UACC Eagle, carrying 60,000 mt, were put on subjects by Vitol, heading to West Africa from Ventspils, Latvia, and the Baltic respectively.
The Mare di Genova was taken by Mercuria carrying 37,000 mt of gasoline going ARA-WAF.
dIESEl
US Gulf Coast rallies to highUS Gulf Coast ultra low sulfur diesel has spiked this week to its strongest point in months, fueled by strong oil prices and export demand into Latin America, market sources said.
S&P Global Platts assessed the market Thursday at the September NYMEX ULSD futures contract minus 3.70 cents/gal. It was traded as high as minus 3.60 cents/gal during the Platts Market on Close assessment process, but an offer was left standing at minus 3.65 cents/gal.
The market was holding steady Friday morning, with bids at minus 3.75 cents/gal and offers at minus 3.65 cents/gal.
The latest assessment is the strongest the market has been since May 18. The market has shot up the past two days, rising 75 points/gal.
That is the largest two-day spike since May 8 and the third-highest two-day jump since January.
Both domestic and foreign demand are driving the rally, market sources said.
Demand in the Gulf Coast and Midwest has been bolstered by the strong price of oil, as diesel is used for trucking, pumps and in hydraulic fracturing fluid. There were 480 Permian oil rigs and 80 Eagle Ford oil rigs the week ending July 27, according to latest Baker Hughes rig count.
Compared with the previous year, those are up 101 rigs
and four rigs, respectively.The oil boom has helped Midwest demand in the
Great Plains states, such as the Dakotas, Wyoming, and Oklahoma.
Group 3 ULSD is at its second-highest point of the year while Chicago ULSD is at a yearly high. The Gulf Coast arbitrage into both regions is open, according to Platts data, which has helped lift the USGC price and has led to a freeze and allocation on the Explorer pipeline.
That domestic diesel hunger is displayed in low stockpiles.ULSD stockpiles are down more than 20 million
barrels year on year, according to the latest US Energy Information Administration data. There were 112.117 million barrels stockpiled for the week ending July 27, according to the report released Wednesday. While that is a weekly build of 2.936 million barrels, it is down 20.154 million barrels from about the same point last year.
Compounding the demand is renewed export appetite from Latin America, source said.
Sources were split on whether a ULSD rally in Singapore this week was helping to lift USGC differentials. FOB Singapore 10 ppm sulfur gasoil differential jumped to a premium of 21 cents/b to the Mean of Platts Singapore Gasoil assessment at the close of Asian trade Thursday, its highest point since June 1. Some market sources have said the Singapore rally could cut off the flows of far east ULSD into Latin America.
“The Far East sent some oil to Latin America that backed some exports into the USGC last [third of] July and first [third of] August, and now we are seeing some of that demand come back,” a ULSD trader said.
Others said, due the transit time from the Far East into Latin America, the Singapore rally should not impact prompt prices.
“It’s more than a 30-day voyage [from the Far East] to the closest part of Latin America,” a second ULSD source said. “The Singapore rally [started] Monday, I don’t think that’s why we rallied. It’s likely driven by ongoing strong domestic demand.”
Singapore stocks lowerAfter eight weeks of builds in middle distillate inventories, stocks in Singapore have finally begun to draw.
Onshore commercial stocks of middle distillates – which include gasoil, jet fuel and kerosene – in the main trading hub of Singapore fell 8.8% to 9.9 million barrels for the week ending August 1, according to IE Singapore data.
In tenders, India’s Nayara Energy has sold up to 70,000 mt of 500 ppm sulfur gasoil at between a discount of 20 cents/b to parity to the August average of the Mean of Platts Arab Gulf Gasoil assessments, FOB.
Trade sources said that Aramco Trading Corp. was awarded the tender, but this could not be confirmed.
The cargo is to load over August 27-31 from Vadinar and is Nayara Energy’s last for August. The refiner has sold five spot gasoil parcels, totaling up to 345,000 mt, for loading in August via tenders.
GASOIl
US backwardation deepensThe Gulf Coast high sulfur heating oil market fell slightly Friday on the move to the 44th Colonial Pipeline cycle but remained unseasonably strong, and swap activity deepened the backwardation.
S&P Global Platts assessed Gulf Coast high sulfur heating oil at NYMEX September ULSD futures minus 14.50 cents/gal, down 25 points/gal. The market was quiet, with an offer heard at minus 14 cents/gal.
Values weakened slightly on backwardation in the market, but swap trading Friday showed the
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Prices effective August 3, 2018OilgrAm Price rePOrt
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backwardation steepening.Three August 2018 Gulf Coast high sulfur heating
oil swaps traded at minus 16.25 cents/gal, indicating a backwardation of about 75 points/gal per cycle through the end of the month.
Prompt values have risen due to low supply, with US and Gulf Coast supply of distillate fuel with more than 500 ppm sulfur at all-time lows according to EIA data.
In the US Atlantic Coast, values for ultra low sulfur heating oil rose Friday as the Renewable Volume Obligation hovered near 3 cents/gal.
ULSHO delivered off the Colonial Pipeline in Linden, New Jersey, was assessed at minus 2.75 cents/gal, up 75 points/gal on the day. Barges moved up in tandem, assessed at minus 3 cents/gal.
Values came in as RVO was assessed at 3.01 cents/gal, down from 3.07 cents/gal. ULSHO is the same as ULSD but has no renewable fuel blending obligation associated with its value since it is not used as
transportation fuel, so its discount to ULSD tends to track with RVO values.
In the Med, the cargo market was supported by healthy demand in North Africa as spot buying interest remained weak in the Amsterdam-Rotterdam-Antwerp hub amid rising freight costs for barges.
CIF Mediterranean 0.1% gasoil cargoes were assessed at a $2.50/mt premium over the front-month LSGO contract Friday, down from $2.75/mt Thursday.
Despite the decrease, differentials were at a nearly two-month high.
“It seems that for August the main demand for 0.1% gasoil is into Algeria...Egypt and Libya are OK, taking some volumes,” a trader said.
“The Med [gasoil market] is a little bit strong and since the West African gasoil market is rather weak at the moment, some gasoil is blended in the North of Europe for sale on an “as-is” density basis in the Mediterranean instead,” he added.
The arbitrage from Northwest Europe to the Mediterranean is only open for heavier gasoil to be sold to Egypt or Libya on a “as-is” basis, a trader said.
JEt
Singapore regrade lower, exports briskJet fuel continued moving out of Asia and the Middle East, helping to limit some of the downside risk in the region where surplus barrels continued to weigh on the market.
The Singapore jet to gasoil regrade shed another 15 cents/b Friday to minus 35 cents/b, continuing a trend lower that began in mid-May.
In the export market, Aramco Trading is moving 60,000 mt of jet fuel from the Persian Gulf to the UK Continent for August 14 loading at a lumpsum freight rate of $1.5 million onboard the Cielo Di Rotterdam, shipping data showed.
(continued on page 16)
Prices effective August 3, 2018OilgrAm Price rePOrt
The Platts Jet Fuel Index is calculated using daily assessments of Jet fuel spot prices in relevant regional centers. These values are compared with average spot prices in the base period (Index value of year 2000 = 100%) to generate a percentage figure reflecting the overall rise or fall in markets compared to the base period.
ChINA, AUG 3 (PGA page 2010)
($/mt) Mid Change
South China FOB
Unl 90 RON AAICU00 680.25–684.25 682.250 +6.250Unl 93 RON AAICW00 688.75–692.75 690.750 +6.250
Cargoes FOB nWe West africa (€/mt) (PGA page 1116)
Gasoline AGNWA00 601.345 +2.335
Cargoes FOB sts West africa (€/mt) (PGA page 1116)
Gasoil 0.3% AGNWE00 551.341 +4.849
Euro/US$ forex rate: 1.1599. Platts Euro denominated European & US product assessments are based on market values and a Euro/US$ forex rate at 4:30 PM local London time. *FOB Amsterdam-Rotterdam-Antwerp.
WESt AFrICA PrOdUCtS ($/mt), AUG 3 Mid Change
West Africa cargoes (PGA page 1122)
FOB NWEGasoline AAKUV00 697.500 +1.750
CIF West AfricaGasoline AGNWC00 712.000 +1.750
FOB StS West AfricaGasoil 0.3% AGNWD00 639.500 +4.750
($/barrel) differential vs 1s strip ($/barrel)No. 6 0.3% S hi pr PUAAE00 77.18–77.20 77.190 -0.480 AAUGA00 10.16–10.18 10.170No. 6 0.3% S lo pr PUAAB00 77.18–77.20 77.190 -0.480 AAUGB00 10.16–10.18 10.170No. 6 0.7% S max PUAAH00 69.18–69.20 69.190 -0.480 AAUGC00 2.16–2.18 2.170No. 6 1% S max PUAAO00 67.18–67.20 67.190 -0.480 AAUGD00 0.16–0.18 0.170No. 6 1% S max 1s strip AAUGG00 67.01–67.03 67.020 -0.330No. 6 2.2% S max PUAAU00 65.85–65.87 65.860 -0.590 AAUGE00 -1.17–-1.15 -1.160No. 6 3.0% S max PUAAX00 64.96–64.98 64.970 -0.660 AAUGF00 -2.06–-2.04 -2.050No. 6 1.0% S max FOB AAWLG00 66.43–66.45 66.440 -0.480 AAWLG20 -0.59–-0.57 -0.580Fuel oil RMG 380 AAWLF00 66.71–66.73 66.720 -0.660 AAWLF20 -0.31–-0.29 -0.300No. 6.1 S max pap bal M AARZS00 67.14–67.16 67.150 -0.300No. 6 1.0% S pap 1st M PUAXD00 66.00–66.10 66.050 -0.400No. 6 1.0% S pap 2nd M PUAXF00 65.45–65.55 65.500 -0.400No. 6 1.0% S pap qtrly PUAXG00 64.97–65.07 65.020 -0.380
*These assessments reflect gasoline cargoes sold on a delivered, ex-duty basis New York, excluding import duty and import taxes/fees.
LSR = Light Straight Run. *=FOB barge. **= Diff to Mont Belvieu non-Targa natural gasoline.
Note: Platts line space assessments reflect the physical trade of gasoline or distillates at two locations agreed upon by the parties along the Colonial Pipeline between Pasadena, Texas, and Linden, New Jersey. The assessments represent the premium or discount paid by a buyer while taking refined product off the line at one location while giving product to the seller at another.
Prices effective August 3, 2018OilgrAm Price rePOrt
Oil major Shell was also moving 90,000 mt of jet fuel from South Korea to the UK Continent at a lumpsum rate of $1.9 million on the Dong-A Thetis, for loading around August 10.
Northeast Asia flows to the US West Coast were also ongoing, as Valero Energy has fixed 35,000 mt jet fuel for August 9 loading from South Korea to the US West Coast at a lumpsum freight rate of $1.05 million, shipping data showed.
“Physical flow still seems a little oversupplied [in Asia],” a Singapore-based trader said.
Data from International Enterprise Singapore showed middle distillate stocks falling 9% week on week to 9.94 million barrels in the week ended August 1.
And in Europe, jet-kerosene inventories in the Amsterdam-Rotterdam-Antwerp trading hub increased 3% week on week to 692,000 mt in the week ended August 1, PJK data showed.
In tenders, China Aviation Oil was said to have bought 39,000-41,000 mt of jet A-1 fuel for delivery over September 7-9 to Tianjin at a premium of around 70 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on a CFR basis.
CAO also bought, through the same tender, 25,000 mt for delivery over September 4-8 to Huangpu at a premium of between 70 cents/b and $1.50/b to MOPS jet fuel/kerosene assessments, CFR.
Award details could not be confirmed, but CAO last bought a 25,000 mt cargo of jet A-1 fuel for August 4-8 delivery to Huangpu at a premium of around 40-60 cents/b to the MOPS jet fuel/kerosene assessments on a CFR basis.
rESId
Singapore stocks drop to nine-year lowSingapore’s commercial stockpile of residues plunged to a nine-year low of 14.799 million barrels in the week ended August 1, IE Singapore data released late Thursday showed.
The stocks dropped 8.6% from a week earlier, the data showed.
Trade sources attributed the low stocks mainly to a low influx of arbitrage cargoes.
Singapore imported 693,497 mt of fuel oil over July 26-August 1, down 60.9% week on week, the data showed.
Sources added that Saudi Arabia has increased fuel oil imports from Europe since June, for its use as feedstock at the kingdom’s power plants.
The narrow price spread between Singapore 380 CST HSFO and 3.5% Rotterdam barge assessments also cut cargo movements from the West to Asia, trade sources said.
At the same time, there is growing space availability at
Singapore’s onshore storage tanks, as traders have given up storage space due to high cost, which has also contributed to lower stocks, a trader said.
Singapore exported 449,001 mt of fuel oil in the week, down 17.8% from a week earlier, according to IE Singapore data.
Looking forward, “there are few factors which will ease the supply tightness,” a trader in Singapore said.
In tender news, Saudi Aramco Mobil Refinery, or Samref,sold 80,000 mt of 700 CST HSFO with maximum 4% sulfur for loading over August 13-15 from Yanbu to Chevron, at a discount of around $15/mt to Mean of Platts Singapore 380 CST HSFO assessments, FOB, market sources said.
Taiwan’s Formosa Petrochemical Corp. offered 40,000 mt of 380 CST HSFO with maximum 2.5% sulfur for loading over August 16-18 from Mailiao. The tender will close on August 6.
ArA inventories set to tighten furtherFuel oil stocks in the Amsterdam-Rotterdam-Antwerp hub fell 10% in the seven days to Wednesday to 1.191 million mt, and further draws in stocks are expected due to three upcoming VLCC loadings, according to data from PJK Consulting.
The Rotterdam high sulfur fuel oil market has been
SINGAPORE JET TO GASOIL REGRADE KEEPS TRENDING LOWER
Source: S&P Global PlattsFOB Singapore jet to 10 ppm Singapore gasoil
-2
-1
0
1
2
03-Aug16-Jul26-Jun06-Jun17-May27-Apr09-Apr
($/b)
(continued from page 8)
Prices effective August 3, 2018OilgrAm Price rePOrt
consistently strong in recent weeks and 3.5% FOB Rotterdam barge intermonth spreads remain in backwardation out until 2019, even through the typically weaker winter months as refinery upgrade programs are expected to tighten the fuel oil complex.
In the coming days three VLCCs, the Seeb, Sea Lion and DHT Stallion, are expected to depart Rotterdam for Singapore, and an Aframax, Albanel, for discharge in the Red Sea.
The tighter RMG 380 CST bunker fuel market has begun to bite on bunker suppliers’ books, and they have approached trading houses to meet prompt requirements this week, a fuel oil trader said.
A workable arbitrage for 3.5% fuel oil cargoes moving from Northwest Europe to Singapore seems plausible if the premium of Singapore cargoes over Rotterdam widens further, as Singapore’s high sulfur fuel oil market kept its strong momentum, underpinned by a low influx of arbitrage supply.
The lack of fuel oil in Singapore is being compounded by market participants’ concerns about recent quality issues detected in some Singapore high sulfur fuel oil, aggravating the tight availability in the region.
Some traders believe this could lend support to the fixture list from Rotterdam as Singapore buyers attempt to lock in delivery of on-spec RMG 380 CST volumes.
Marine fuel and lubricant sales at the port of Rotterdam, Europe’s largest bunkering hub, slipped by 5.3% on the year in the second quarter.
Total bunker sales dropped to 2.36 million cu m in the second quarter, from 2.49 million cu m in the same period a year earlier, data released by the port authority Friday showed.
Fuel oil sales sank by 5.1% to 1.98 million cu m, while sales of marine gasoil and marine diesel oil together dropped by 6.8% to 359,261 cu m. Marine lubricant consumption slipped by 4.4% to 25,269 cu m.
LNG bunker sales jumped to 1,297 mt, compared with 729 mt in the first quarter, and around 1,500 mt for the whole of 2017.
FEEdStOCkS
US sour VGO rallies to $13/b over crudeHouston feedstocks differentials rebounded Friday, with sour vacuum gasoil hitting a $13/b premium to crude for the first time since late June on stout diesel cracks at US Gulf Coast refiners.
High-sulfur VGO barges for early to mid-August traded late Thursday at September WTI futures plus $13/b, up from the assessment at $9.30/b over crude Thursday afternoon. Low-sulfur VGO barges were talked stronger.
“High-sulfur VGO is where all the strength is,” a US market source said.
The rise in diesel cracks has meant extra support for sour feedstocks.
Since July 2, the diesel-WTI crack in the Gulf Coast region has risen $4.24/b to $19.02/b through Thursday, including a day-over-day $2.78/b jump on July 27.
Gulf Coast ULSD has been on a steep climb this week, bolstered by strong domestic and export demand. S&P Global Platts Thursday assessed the market at the NYMEX September ULSD futures contract minus 3.70 cents/gal, up from minus 4.50 cents/gal on Monday. Thursday marked the strongest level the market has been since May.
The last time sour VGO was assessed higher than $13/b over crude was June 22 at WTI plus $13.3/b, with a reduction in imports from Africa, Europe and other sources supporting the market at that time.
In Europe, the rally in Panamax freight rates has weakened the potential of a VGO arbitrage to the US.
“The arb seems to have slammed shut overnight,” a Europe feedstocks trader said.
Other market sources pointed to a workable arbitrage, with two VGO cargoes heard fixed from Europe due for discharge in the USGC, according to a market source.
“A paper arb maybe,” a second Europe feedstocks source said, “but in reality it’s not really [open].”
Panamax United Kingdom-USGC rates for VGO, crude and other dirty products have been assessed above $20/mt for four consecutive days through Thursday.
Offers for USGC VGO cargoes have dipped below barge values late this week.
“You’ve got to come in with the offer under the barges or the barges will just block you out,” a second US market source said. “Why not buy two or three barges as you need them instead of 350,000 to 400,000 barrels on a ship that you have to tank and tie up on inventory.”
ArA naphtha stocks dip on strong gasolineNaphtha inventories in the Amsterdam-Rotterdam-Antwerp hub fell 10.6% to 328,000 mt, in the week to Thursday, but were 43.86% higher year on year, according to data from PJK International.
The fall in stocks week on week reflects an uptick in buying interest as major players in the European petrochemical complex returned to the market to purchase cracking grade product, while a stronger gasoline complex saw renewed demand for naphtha purchased as a blending component for finished-grade gasoline.
A widening spread along the east/west naphtha curve – tracking the premium of Mean of Platts Japan swaps over the CIF NWE cargo swap – has also implied a stronger draw from the Asian naphtha complex over the week, with sources in Europe optimistic that demand will remain healthy throughout August before scheduled turnarounds take place over September to November.
“The East has been strong and this has meant the Mediterranean has not had much to spare for northern Europe,” said one source.
Besides the draw in stocks, sustained strength in Europe’s gasoline market and a firm pull from the Asian naphtha complex has translated into appreciating values across naphtha grades.
Cash premiums of open specification grade naphtha vs. the front month swap were pegged by one source at $5.00/mt Thursday, representing an appreciation against previous week’s values, when differentials dipped into minus 50 cents/mt July 27.
In the ARA gasoline market, inventories rose by 3.07%
Prices effective August 3, 2018OilgrAm Price rePOrt
to 0.97 million mt (8.20 million barrels), in the week to Thursday, with the year-on-year figure increasing by 6.33%, PJK International data showed.
The current price of gasoline in Northwest Europe is the fundamental driver of refineries continuing to produce product, with global demand steady.
Despite the minimal increase in this week’s stocks, sources have noted it is difficult for refineries to keep up with the demand for gasoline in the region: “The gasoline price is high, it’s a two-pronged attack – a lot has gone to West Africa and the US has pulled. The high temperatures have caused refineries to be down slightly,” one source said.
Components are well supplied in the region, this, alongside a healthy Eurobob gasoline crack has provided incentive for refiners to continue their supply of product. “Components in the North are much more liquid,” one trader said.
GAS lIQUIdS
Asia propane more economic than naphthaAsian LPG prices recovered Friday, outpacing the $5.76/mt increase in October ICE Brent crude futures from the previous Asian close.
S&P Global Platts assessed H1 September CFR Japan physical propane at $580.5/mt, up $3.50/mt day on day.
The premium for H1 September delivery propane over the September CP swap dipped $1.5/mt day on day to $20.5/mt Friday.
The September FEI propane swap discount to MOPJ naphtha swap further widened to $63.25/mt, from $62.5/mt in the previous session.
As the discount continues to widen, LPG remains more economical than naphtha as a feedstock at steam crackers.
India’s IOC tendered to buy two evenly-split LPG cargoes, each 44,000 mt, for October 5-10 and October 10-30 delivery into Haldia/Ennore.
The tender closes August 13 with next-day validity. In its
last tender, IOC bought LPG on a term basis of eight evenly split VLGC cargoes of 45,000 mt each, and 12 evenly split MGC cargoes of 20,000 mt each for delivery in 2018.
State allows Mariner East 2 constructionEnergy Transfer Partners will be able to resume construction of the Mariner East 2 and 2X NGL pipelines at eight locations in Chester County, Pennsylvania, after state regulators discontinued an injunction Thursday.
In a 3-2 vote, the Pennsylvania Public Utility Commission approved a motion to remove the injunction issued in June that had blocked construction of the pipelines in Chester County due to public safety concerns.
The latest motion noted that Energy Transfer Partners, which owns the pipelines that its Sunoco Pipeline subsidiary operates, had satisfied the requirements of the June injunction by providing proof of construction permits from the Department of Environmental Protection at eight locations in West Whiteland Township, as well as inspection and testing protocols, emergency response plans and safety training curricula.
Construction will remain suspended at four locations in West Whiteland Township until the company obtains the necessary permits.
“We are pleased with the decision by Pennsylvania’s PUC to allow our construction to resume in West Whiteland Township where we have the necessary permits,” said Vicki Granado, an Energy Transfer spokeswoman.
“Our timeline on ME2 remains unchanged due to the fact that we altered our plans last month to re-purpose a section of an existing pipeline while we reevaluate construction methods in Delaware and Chester counties.”
Expected to be completed in the second half of 2018, the 345,000 b/d Mariner East 2 pipeline will transport LPG from the Marcellus and Utica shale plays to Marcus Hook for export.
tANkErS
typhoon shuts eastern China portsPorts along China’s eastern peninsula were closed Friday as Typhoon Jongdari made landfall at the coastal regions of Jinshan, Shanghai at 0230 GMT Friday, the National Meteorological Center said.
Zhoushan-Ningbo, Yangshan and Shanghai ports were closed late Thursday, while the Rizhao port Maritime Safety Administration sounded a gale warning Friday, China-based sources said.
China’s Central Meteorological Observatory had issued a blue warning Thursday. China has a four-tier warning system for severe weather, with red representing the most serious followed by orange, yellow and blue.
“Bunkering operations should resume by the weekend, although some ports will resume later than others,” a trader said.
Seven Saudi tankers go dark off yemenSeven Saudi tankers appear to have shut off their transponders that make their position visible to the world after last week’s Houthi attack on two VLCCs in the Red Sea, according to S&P Global Platts trade flow software cFlow.
Two unnamed Saudi-owned VLCCs were attacked off the west coast of Yemen last week, prompting state-owned Saudi Aramco to halt all oil shipments through the Bab al-Mandab strait at the bottom of the Red Sea.
A total of seven tankers owned by Saudi state shipping company Bahri now appear to have shut off their transponders, according to cFlow, keeping their location hidden.
The VLCCs Arsan and Abqaiq have not updated their location since the mornings of July 23 and 25, respectively, when they were heading towards Bab al-Mandab.
Three part-laden VLCCs, the Khuzama, the TI Hawtah and the Marjan, were gathering at the southwest corner of Oman off the port of Salalah, but have not updated their location since July 30-31. Another, the Khafji, was
Prices effective August 3, 2018OilgrAm Price rePOrt
heading past Oman towards the Red Sea when it was last heard from early on August 1.
And the chemicals tanker NCC Reem was in the Gulf of Aden carrying a cargo towards the Red Sea when it last
updated its location, on the morning of 1 August.The operators of the tankers may have determined that
keeping their locations visible while operating near Yemen presents a security risk. The rest of the Bahri fleet operating elsewhere in the world appears to be updating its location as normal, according to cFlow. Spokesmen for Saudi Aramco and Bahri were not immediately available for comment.
East of Suez VlCC market heats upA flurry of cargoes entering the market saw the East of Suez VLCC rates firm Friday.
The Asia VLCC market was also getting ample support from the activity boost being witnessed in West Africa.
“Around 84 vessels are open in the Persian Gulf for the August 19-29 loading date range, which is not considered tight in terms of tonnage supply. However, the market is still showing strengthening,” a VLCC broker said.
The competition for tonnage from the West Africa market was perking up sentiment to a large extent, a source
with a VLCC owner said.“As predicted, the rates have edged up but it is yet to
hit the ceiling at w55. There is good support from activities across the Persian Gulf, West Africa and the USG-Caribbean regions. It gives owners the confidence to push the rates up by w1-w2 than the last done levels,” another VLCC broker said.
Fixture-wise, the Ellinis was placed on subjects by Unipec to load 270,000 mt crude, basis August 22 laycan from the Persian Gulf to China at w54.
In the Suez market, activity remained subdued due to the lack of fresh cargoes.
The Aframax market gained strength on the back of a few replacement jobs and from increasing demand for tonnage from Australia.
“The short supply of tonnage in the Persian Gulf is still persisting due to the Indonesia market getting more balanced,” an Aframax broker said.
There were many outstanding cargoes in the market besides the replacement jobs due to a few vessels failing the vetting requirements, an Aframax shipowner source said.
CAPItOl CrUdEVenezuela’s new rock bottom for oil productionThe US EIA expects Venezuelan oil production to sink below 1 million b/d by the end of this year and fall further to 700,000 b/d by the end of 2019. EIA analyst Lejla Villar, who developed those forecasts, joins Capitol Crude to talk about the staggering collapse of Venezuela’s oil sector.
listen to the podcast here:http://plts.co/Cxtt30l4rh9
South korea finds US crude cheaper than russian grades
■■ US crude a $4.75/b discount to russia in June■■ russian crude sensitive to Asian product cracks■■ tax exception supporting US volumes
Singapore—South Korean refiners paid close to $5/b less for delivered US crude compared to Russia blends in June, a stern reminder that short-haul supplies do not always come cheap and long-haul cargoes are not necessarily expensive.
South Korea has imported a total of 2.17 million barrels of crude and condensate from Russia in June and paid on average $79.24/b, latest data from state-run Korea National Oil Corp. showed. KNOC’s import
cost figures include freight, insurance, tax and other administrative and port charges.
On the contrary, Asia’s fourth-biggest energy consumer imported 3.01 million barrels from the US in June at an average cost of $74.49/b, which was $4.75/b cheaper.
The latest data raised many eyebrows in the regional market as the delivery distance from Far East Russia to Northeast Asia is significantly shorter than the US-South Korea route.
Industry sources noted that the voyage time from Far East Russia’s Kozmino port, the DeKastri terminal and Prigorodnoye export terminal to Northeast Asia is less than a week versus up to 50-60 days from the US Gulf Coast.
However, most of the light sweet Far East Russian grades are highly sensitive to Asian refined oil product
cracking margins, with price differentials for ESPO Blend, Sakhalin Blend and Sokol often rallying in tandem with strong light and middle distillate cracks in
SOUTH KOREA’S CRUDE IMPORT COSTS
Note: Costs include freight, tax, insurance, port fees and others. Costs show average value paid per monthSource: Korea Nationa Oil Corp.
Euro/US$ forex rate: 1.159. Platts Euro denominated crude oil assessments are based on market values and a Euro/US$ forex rate at 4:30 PM local London time.
Prices effective August 3, 2018OilgrAm Price rePOrt
The daily OPEC basket price represents an index of the following 11 grades: Algeria’s Saharan Blend, Indonesia’s Minas, Iranian Heavy, Iraq’s Basra Light, Kuwait’s Export, Libya’s Es Sider, Nigeria’s Bonny Light,Qatar’s Marine, Saudi Arabia’s Arab Light, Murban of the UAE and Venezuela’s BCF 17.
*P-5 WTI is a crude oil postings-based index as of 5:30 p.m. local New York time. Posted prices by the following companies are used in the index: Phillips66, Plains, Sunoco, Shell, and Valero. Postings available at presstime. Companies listed are representative of key crude oil purchasers.
lAtIN AMErICA CrUdE ($/barrel), AUG 3 (PGA page 280)
Mid Change diff to diff to Futures diff to dated FOB Crude WtI strip Brent strip Brent strip
Oct 18 ICLO003 654.25 +4.00 648.00 657.00 46906 158656
Nov 18 ICLO004 651.75 +3.75 645.75 654.50 16590 65125
Total ICLO000 260604 XILOP00 9485
*Volume, open interest and PNT reflect prior trading day. PNT reflect volume for Privately Negotiated Trades or off-exchange. **Oman settlements are Post Close settlements. ***Privately Negotiated Trade values found on PGA page 710
Source: CQG
WTI DISCOUNT TO BRENT NARROWS
Platts WTI m1 vs Brent m1Source: S&P Global
-7
-6
-5
-4
-3
-2
02-Aug25-Jul17-Jul09-Jul29-Jun
($/b)
Prices effective August 3, 2018OilgrAm Price rePOrt
All prices are provided by DTN. Discounts or temporary allowances offered by individual companies are not included in posted prices. Prices are unbranded unless noted. Prices are conventional gasoline unless noted. All prices in cts/gal. (a)=RFG. (b)=Branded postings (e)=CARB gasoline/No.2 oil *=Low Sulfur Diesel
Prices effective August 3, 2018OilgrAm Price rePOrt
Commodity net ChangeCOMMItMENtS OF trAdErS AS OF JUl 31Commodity net Change
Futures only (PGA 707) total non-commercial contractsCrude Oil C017086 613400 +2929RBOB C029086 110958 +11316NYMEX NY ULSD C060086 42017 +305Natural Gas C059086 -126427 +1684 total non-reportable contractsCrude Oil C017090 38197 -2988RBOB C029090 8081 -1062NYMEX NY ULSD C060090 14962 +688Natural Gas C059090 22809 -84 total commercials contractsCrude Oil C017083 -651597 +59RBOB C029083 -119039 -10254NYMEX NY ULSD C060083 -56979 -993Natural Gas C059083 103618 -1600
Futures and options total non-commercial contractsCrude Oil C017048 649698 +940RBOB C029048 112191 +11289NYMEX NY ULSD C060048 41431 +288Natural Gas C059048 -128579 +1073 total non-reportable contractsCrude Oil C017052 41687 -2312RBOB C029052 8137 -1083NYMEX NY ULSD C060052 15525 +934Natural Gas C059052 22916 -363 total commercials contractsCrude Oil C017045 -691385 +1373RBOB C029045 -120327 -10205NYMEX NY ULSD C060045 -56955 -1221
Natural Gas C059045 105664 -710
Source: Commodity Futures Trading Commission
the region.In addition, the free trade agreement between South
Korea and the US, which took effect from March 2012, has completely removed import duties on energy products coming from the North American supplier.
South Korea has imported 14.1 million barrels from the US in the first half of this year at an average cost of $69.08/b, while 21.57 million barrels arrived from Russia
over the same period at an average cost of $70.77/b.Average cost comparison between Russian and
US crude purchased in 2017 could not be made due mainly to the big difference in import volumes from the two producers. South Korea has only actively started to buy US crude since second half of the third quarter last year.
russian spot premiumsFar East Russian crude grades are highly sensitive to Asian refining margins as majority of ESPO Blend, Sakhalin Blend and Sokol spot supplies feed into the big three Northeast Asian demand centers namely China, South Korea and Japan. Spot differentials for the distillate-rich Russian grades typically outperform rival Southeast Asian and Oceania light sweet crude when cracking margins trend up in the region.
The second-month Singapore gasoil to Dubai swap crack rallied in Q2, averaging $16.23/b during the month of May, the highest level since May 2014 when it averaged $16.66/b, S&P Global Platts data showed.
Demonstrating Far East Russian grades’ strong correlation to regional product margins, middle
distillate-rich Sokol crude commanded an average premium of $5/b to the average of first-line Dubai and Oman assessments on a CFR North Asia basis during Q2. It was the highest quarterly premium since Q3 2014, when the differential averaged $5.20/b, Platts data showed.
Furthermore, the April-June period saw the spread between WTI and Dubai crude price benchmarks widen to a steep discount, making various North American export grades loaded during the quarter extremely competitive.
Platts data showed the spread between the front-month WTI swap and same-month Dubai crude swap has averaged at minus $3.91/b in Q2, the biggest discount since averaging minus $5.13/b in Q3 2014.
tax exemptionSouth Korea levies a 3% tariff on crude imports including Russia, but domestic refiners are exempted from the tax on imports from the US thanks to the FTA, industry officials based in Seoul said.
“No tariff on imports of US crude is the main reason to get more cargoes from the US because prices differences among grades are very small,” said an official at SK Innovation, South Korea’s biggest importer of US crude.
“This is the same reason to import more Forties on which no tariffs are imposed thanks to the FTA with the EU,” the official said. “We will continue looking for US grades to take advantages of the FTA with the US.”
SK Innovation has imported 8.2 million barrels of US crude over January-June this year, compared with none purchased during the same period a year earlier.
Officials from GS Caltex, the country’s second-biggest refiner, also said the company has been encouraged to buy more cargoes from the US to take full advantage of the import duty exemption. GS Caltex has imported 5.91 million barrels of US crude in H1, compared with just 525,000 barrels bought a year earlier. — Gawoon Philip Vahn, Charles Lee
SOKOL’S CORRELATION WITH ASIAN CRACKS
* Sokol’s premium re�ects di erential to Platts Oman/Dubai average** Gasoil crack represents spread between Singapore physical gasoil assessment and M2 Dubai SwapSource: S&P Global Platts
China’s CAO to focus on core business amid trade tensions
■■ China jet fuel cargoes to US unlikely■■ Acquisitions to lift European opportunities■■ Jet fuel trading volumes to climb in Q3
Singapore—China Aviation Oil warned Friday that business conditions are likely to remain tough because of geopolitical tensions and trade protection measures, but said it would aim for growth by pushing its core businesses.
The company is also eyeing opportunities to send arbitrage jet fuel cargoes to Europe amid concerns that the escalating US-China trade war will prevent Chinese jet fuel cargoes moving to the US.
CAO’s jet fuel trading volumes in H1 fell nearly 14% on the year, the company said. Its gasoil and crude oil volumes picked up sharply in the period, helping the company’s overall trading volumes to post robust growth of more than 12%.
CAO, which is the largest physical jet fuel trader in the Asia Pacific region, added that its latest acquisition, Navires Aviation Limited, would help to grow its business in Europe and expand its presence in international markets. Navires Aviation has been renamed China Aviation Fuel (Europe) Limited.
“CAFEU provides CAO with a springboard to further grow our jet fuel supply and trading portfolio as well as aviation marketing business in Europe and strengthen our global presence,” CEO Meng Fanqiu said in a statement.
The acquisition, which was completed at the end of June, is expected to enable CAO to secure jet fuel outlets and cater to local and international airlines at Schiphol, Frankfurt, Brussels and Stuttgart airports in Northwest Europe.
arbitrage to europe“We are looking for opportunity to send cargoes to Europe during the rest of 2018, with volumes expected to be around 100,000-200,000 mt,” said Meng. He added that those volumes would be much lower than total 2017 arbitrage volumes to Europe of 600,000 mt.
CAO did not send any jet fuel cargoes from Asia to Europe in the first seven months of this year as the arbitrage window was closed.
In the first half of 2018, the company’s jet fuel trade volumes were 6.74 million mt, down 14.4% on the year and 18.3% below H2 2017, the company said.
Despite the reduction in volumes, gross profit grew 13.7% year on year as the company optimized its jet fuel supply and trading activities.
Trading profit was strong in Q1 due to market tightness as buyers in Europe, Africa and Asia were often competing for the same cargoes.
Meng expects trading volumes to rise in Q3 as the July-September period is the peak season for jet fuel trading globally.
trade tensions“If the China-US trade war further escalates, it is unlikely that jet fuel cargoes from China will move to the US. But some other trading opportunities would arise,” vice president Zhang Xinbo said.
CAO supplied less than 2 million mt of jet fuel to airports in the US last year, 60% of which were cargoes shipped from North Asian countries – China, South Korea and Japan. The rest were cargoes supplied by US refiners.
“We have talked to South Korean refineries and they are very happy to send more cargoes to the US amid intensive competition within Asia,” Zhang said.
Independents’ issuesCompany officials said that financial issues faced by China’s independent refiners would limit business opportunities for crude trading over the course of the rest of the year.
“China’s independent refineries may encounter many difficulties this year, and we expect their crude demand to fall in H2. But the country’s crude demand will rise,” Meng said, adding that CAO had expanded its customer profile to include state-owned refineries.
Crude oil pushed up the company’s non-middle distillates volumes 42.6% on the year to 8.74 million mt in
H1, the company said.CAO launched its crude oil trading business in the
second half of 2016 with trading volumes amounting to 6 million mt in the year, rising to 6 million-7 million mt in 2017. It set up the crude business after crude oil import quotas were awarded to independent Chinese refineries in 2015.
The company mainly sources crude cargoes from the Middle East and supplies to Asian countries.
China Aviation Oil (Singapore) Corporation is listed on the Singapore Stock Exchange and is a subsidiary of China National Aviation Fuel Group Corporation. — Oceana Zhou,
Sambit Mohanty
heatwave forces European refiners to cut runs, but impact seen marginal
London—Some refineries in Europe have been opting to reduce crude runs as cooling facilities struggle dealing with the current heatwave, sources told S&P Global Platts Friday.
Northwest Europe especially has been hit by unusually high temperatures, up to 40C, and the heatwave set to last for a while longer.
“The high temperatures are causing refineries to be down slightly [on runs],” one trading source said.
Refineries need to cool the crude distillation columns and some have been reducing rates to cope with the heat, although the measures appear to be temporary and have not been widespread, sources said.
Some refineries might have to reduce capacity by “one or two percent,” said a source with the German mineral oil association, but that would have “very little impact on refinery output.” While in the past high temperatures could have affected refineries’ cooling abilities, currently their “efficiency is so so high,” they can cope well, the source said.
A number of refineries in the past weeks have had problems with electricity glitches although those were not attributed to the heatwave and have since been fixed.
The reduced run rates were seen as partly lending support to Northwest Europe’s gasoline market which
has been very tight on seasonally higher demand and shipments to North America and West Africa, according to sources. — Solomon Lanitis, with Elza Turner
Brazil’s Petrobras to install three new FPSOs in third quarter
Rio de Janeiro—Brazilian state-led oil producer Petrobras will install three new floating production units at offshore subsalt fields in the third quarter that will lead to a jump in crude output, starting in the fourth quarter, company officials said Friday.
“We expect relevant production growth in the second half of 2018,” Solange Guedes, the company’s director for exploration and production, said during a press conference to discuss second-quarter earnings. “The expectation is for strong production growth, notably in the fourth quarter.”
The upswing would reverse the current downward trend in output seen since late 2017, when Petrobras embarked on a heavy schedule of maintenance shutdowns at floating production, storage and offloading vessels, or FPSOs, installed at subsalt fields. Petrobras’ first-half 2018 output was undermined by the completion of several asset sales, including the sale of a stake in the Lapa Field to France’s Total and a 25% stake in the mature Roncador Field to Norway’s Equinor.
Petrobras expects the new FPSOs to help the company meet its 2018 production targets of 2.7 million b/d of oil equivalent globally and 2.1 million boe/d in Brazil, Guedes said. That would be down from the 2.154 million boe/d produced domestically in 2017, but in line with first-half average output of 2.0174 million boe/d.
The company is still ramping up two new FPSOs that pumped first oil earlier this year and should see ramp-up work continue in the third quarter, according to Hugo Repsold, Petrobras’ director for production development and technology.
The FPSO P-74, which pumped first oil from the Buzios Field on April 20, is currently producing 30,000 boe/d from
a single well, Repsold said. The vessel’s reinjection system, which will allow additional wells to be connected to the vessel, is still undergoing commissioning, Repsold said.
Buzios is the first of the transfer-of-rights fields to start production. Petrobras was granted the right to pump 5 billion barrels of crude from the fields as part of a 2010 oil-for-shares swap with the government. Petrobras also discovered an additional 5 billion-15 billion barrels of recoverable crude in the fields, according to Brazil’s National Petroleum Agency, or ANP. Rights to develop the additional oil volumes are expected to be sold at a production-sharing auction on November 29.
Petrobras owns 100% of Buzios.First oil was also achieved at the Tartaruga Verde
Field on June 22, where the FPSO Cidade de Campos dos Goytacazes handles output, Repsold said. The field is currently producing about 25,000 boe/d from two wells, with a third well currently being connected, Repsold said. Petrobras owns 100% of Tartaruga Verde and the sister Tartaruga Mestica fields.
The productivity of the wells at the fields “already gives you an idea about the difference in the order of magnitude these units give in the subsalt,” Repsold said.
The three new FPSOs will likely have a bigger impact on output later in the year, Repsold said.
The FPSO P-67 is currently undergoing commissioning by Brazil’s Navy in Guanabara Bay, but should head out to sea for installation at the Lula Norte area of the Lula Field in August, Repsold said. The FPSO P-69, meanwhile, should also leave a shipyard in Angra dos Reis, south of Rio de Janeiro, for the Lula Extremo Sul area of the Lula Field toward the end of August, he said.
Both FPSOs have installed capacity to produce 150,000 b/d, Repsold said. Petrobras owns a 65% operating stake in Lula, while Shell holds a 25% minority share and Portugal’s Galp Energia the remaining 10%.
The FPSO P-75 left a Chinese shipyard in July and is about halfway to Brazil, Repsold said. The FPSO will be installed at the Buzios Field later in the third quarter. The FPSO P-75 also has installed capacity to pump 150,000 b/d.
The FPSO P-76, meanwhile, is expected to leave the Pontal do Parana shipyard in the fourth quarter, Repsold said, adding the FPSO, which can pump up to 150,000 b/d, is expected to enter operation before the end of the year. — Jeff Fick
since December 2016 — the last month before OPEC and 10 non-OPEC allies agreed to implement supply cuts that are now being eased — as did Iraq and Algeria, the survey found.
Those gains were more than enough to offset output declines in sanctions-hit Iran, crisis-wracked Venezuela and conflict-torn Libya.
OPEC on June 23 agreed with its partners to end overcompliance with their production cuts and boost output by a collective 1 million b/d to replace barrels expected to be shut in by the reimplementation of US sanctions on Iran and Venezuela’s economic quagmire.
OPEC’s July compliance among the 12 members with specified quotas stands at 105%, down from 131% in June, according to Platts calculations.
Gainers and strugglersIran, which has warned other members against encroaching on its market share, saw its production fall to 3.72 million b/d in July — lowest since January 2017 — as European buyers began winding down their purchases in advance of US sanctions snapping back in November.
Venezuela, suffering from crushing debt, crumbling infrastructure, worker unrest, hyperinflation and US sanctions, continued its output slide to 1.24 million b/d, a 670,000 b/d drop in a year and the lowest in the 30-year history of the Platts OPEC survey, except a debilitating worker strike in late 2002 and early 2003.
Libya’s output dropped 30,000 b/d month-on-month to 670,000 b/d, its lowest since April 2017, the survey found, as
OPeC output surges on saudi crude boost...from page 1
US crude exports have slowed in recent weeks, likely because the US-China trade war has reduced flows to China, the single largest buyer of US crude in May. US Energy Information Administration data shows that on a four-week average basis US crude exports have slowed to 1.87 million b/d during the week that ended July 27 from 2.43 million b/d July 27.
With refinery maintenance season around the corner, US crude inventories could start to rise, especially if exports do not pick up again.
West African crude market sources Friday warned that reduced refinery runs would lead to higher US crude exports into Europe, competing with Nigerian light sweet crudes.
The crude bears should keep in mind looming US sanctions on Iran, which are expected to remove up to 1
Crude futures fall on higher OPeC supply, us-China trade spat ...from page 1
it dealt with a militia blockade of its eastern ports that was resolved July 11 and a kidnapping at the Sharara field in the country’s southwest.
Angola’s production remained steady at 1.45 million b/d in July, a 190,000 b/d year-on-year decline, according to the survey, as its mature fields continued to deplete. But the African country should see its production rebound in the coming months with the offshore Kaombo field beginning first production in late July.
Major gainers besides Saudi Arabia include Nigeria, which boosted its output to 1.80 million b/d as the force majeure on key export grade Bonny Light was lifted mid-month, and the UAE and Kuwait, both of whom had signaled their intent to loosen their taps.
UAE output rose to 2.97 million b/d, while Kuwait produced 2.78 million b/d in July, the survey found.
Iraq also raised crude exports from its southern terminals to a record high in July, with its production coming in at 4.57 million b/d, according to the survey.
Newest member Congo produced 310,000 b/d in July, a drop from 330,000 b/d in June.
The Platts OPEC figures were compiled by surveying
OPEC JULY OUTPUT CHANGE
Source: S&P Global Platts
-0.1 0.0 0.1 0.2 0.3
Iran
Venezuela
Libya
Rep of Congo
Equatorial Guinea
Gabon
Angola
Qatar
Ecuador
Algeria
Iraq
Kuwait
Nigeria
UAE
Saudi Arabia
(million b/d)
OPEC and oil industry officials, traders and analysts, as well as reviewing proprietary shipping data. — Herman Wang,
Eklavya Gupte
recent opec production (million b/d)Country July Change June May April March
Algeria 1.07 0.01 1.06 1.05 1.01 1.05
Angola 1.45 0.00 1.45 1.52 1.53 1.61
Congo-Brazzaville 0.31 -0.02 0.33 N/A N/A N/A
Ecuador 0.53 0.01 0.52 0.52 0.52 0.52
Equatorial Guinea 0.12 -0.01 0.13 0.13 0.13 0.13
Gabon 0.18 0.00 0.18 0.16 0.18 0.19
Iran 3.72 -0.08 3.80 3.83 3.83 3.83
Iraq 4.57 0.03 4.54 4.47 4.42 4.43
Kuwait 2.78 0.07 2.71 2.70 2.71 2.7
Libya 0.67 -0.03 0.70 0.95 0.97 1.03
Nigeria 1.80 0.08 1.72 1.73 1.88 1.95
Qatar 0.62 0.01 0.61 0.60 0.59 0.6
Saudi Arabia 10.63 0.24 10.39 10.01 9.95 9.98
UAE 2.97 0.09 2.88 2.87 2.87 2.8
Venezuela 1.24 -0.06 1.30 1.36 1.41 1.57
total 32.66 0.34 32.32 31.90 32.00 32.39
Notes: The estimate for Iraq includes volumes from semi-autonomous region of Iraqi Kurdistan
Source: S&P Global Platts
million b/d of crude from the market when they go into effect November 4.
Also, refined products remain relatively tight, as demand has been strong for gasoline and diesel.
Some refineries in Europe have reduced runs because of the current heat wave, lending support to gasoline prices, sources said Friday.
In NYMEX products, September RBOB settled 26 points lower at $2.0655/gal Friday, while September ULSD settled 49 points lower at $2.1269/gal. — Jeff Mower
rEFINEry UPdAtES
star, aliaga, turkey■■ Owner: Socar turkey Enerji AS (StEAS)■■ Overall capacity: 214,000 b/d
notes: Turkey’s 214,000 b/d STAR refinery – being developed by Socar Turkey Enerji, a Turkish subsidiary of Azeri state oil company Socar – Friday began receiving its first cargo of crude, Socar confirmed in a statement.
According to the statement the tanker, Asheron arrived Friday morning carrying 80,000 mt of Azeri light from the Georgian port of Supsa.
The cargo of Azerbaijan’s Azeri Light crude grade, loaded from the Georgian port of Supsa on July 28-29 and headed to Turkey’s new STAR refinery, a source at Azerbaijan’s Socar Trading confirmed earlier this week, S&P Global Platts reported previously. The cargo of around 661,000 barrels was loaded onto the Aframax MT Absheron for arrival August 2-3.
Trading sources said previously that they expected a sourer grade such as Russia’s medium sour Urals crude to be the more typical feedstock instead of the lighter, distillate-rich Azeri Light.
A Socar official confirmed to Platts Friday that with the delivery of the first crude cargo the refinery will now be able to start test production with the aim of moving to commercial production in October. According to previous
statements by Socar officials the start of commercial production will be followed by a steady ramp up of output expected to reach full capacity by January 2019.
Previously the start of commercial production was slated for September although this was changed due to changes in the order in which some units were being completed.
Expected to cost in the region of $5.5 billion, the STAR refinery has been designed to produce 4.95 million mt/year of diesel, 1.3 million mt/year of naphtha, 698,000 mt/year of petroleum coke, 1.695 million mt/year of jet fuel, 525,000 mt/year of reformate, 455,000 mt/year of mixed xylenes, 261,000 mt/year of LPG and 157,000 mt/year of sulfur.Source: Company
duna (danube) in szazhalombatta, near Budapest, hungary
notes: MOL confirmed Friday it is planning maintenance at its Steam Cracker-2 olefin plant at its petrochemical plant complex in Tiszaujvaros in late Q3 and early Q4. The company is also planning a turnaround at the Rijeka refinery in Q4.
MOL said an unplanned shutdown at its Bratislava refinery earlier in Q3 will affect diesel production volumes for the quarter; the company did not specify the extent or duration of the shutdown.
MOL’s group-wide refinery margin narrowed 13.5% on the year to $5.52/b in the second quarter of 2018, owing to
rising oil prices, the company said in its earnings report. But the group-wide margin increased on the quarter, by 3.9%. The combined refinery margin of the Duna and Bratislava refineries was $6.48/b in Q2, down 7.5% on the year but up 5.3% on the quarter.
MOL said that despite rising oil prices, motor fuel crack spreads remained relatively strong due to high demand and low inventories. As a result, the company said it is raising its group-wide refinery margin forecast by $1/b to $5-$6/b for this year.
The Brent-Urals price spread (beneficial for MOL as it mainly processes cheaper Urals crude) was $1.95/b in Q2, rising 46% from a year earlier and reaching its highest in almost two years.
Total throughput across MOL’s refineries was 4.91 million mt in Q2, up 5.6% on the year. Throughput in H1, 2018 was 9.03 million mt, up 2.1% on the year.
Diesel made up 43.1% of total throughput in Q2, up from 42.9% a year earlier, while the gasoline yield also increased, from 17.8% to 18.9%. The share of naphtha was little changed at 8.0%; that of kerosene rose from 2.6% to 3.2%; while the combined share of fuel oil, bitumen and other products fell from 16.1% to 15.4%.Source: MOL