Image credit: Freight Investor Services (FIS)

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Commentary

Oil prices held steady as a fall in U.S. crude inventories to the lowest levels since 2015 supported the market, although Sino-U.S. trade tensions and economic weakness from emerging markets remained a concern. U.S. crude futures were at $67.93 per barrel at 06:54 GMT, up 16 cent from their last settlement. Brent crude futures were up 8 cents at $76.58 a barrel. "Oil inventory data released last night showed a larger-than-expected draw in crude inventories," said O'Loughlin, investment analyst at Australia's Rivkin Securities. U.S. commercial crude oil inventories fell by 4.3 million barrels to 401.49 million barrels in the week to Aug. 31, the lowest since February 2015, U.S. EIA data showed on Thursday. Despite that, analysts said prices were curbed by a rise in refined product stocks and a relatively weak U.S. peak fuel consumption season this summer, known as the driving season. Gasoline stocks rose by 1.8 million barrels, while distillate stockpiles which include diesel and heating oil, climbed by 3.1 million barrels, the EIA data showed.

"U.S. gasoline inventories are now above the top of the 5-year range," U.S. investment bank Jefferies said in a note on Friday. "The U.S. summer driving season has proven to be a lacklustre one in terms of gasoline demand," said O'Loughlin at Rivkin Securities. Ongoing emerging market weakness as well as potential new U.S. import tariffs on Chinese goods were also weighing on oil market sentiment. "Emerging markets, which tend to have a higher energy intensity of GDP, are an obvious concern," said Jefferies.

Asian shares slipped to a 14-month trough on Friday as investors feared a new round of Sino-U.S. tariffs, while currencies from Indonesia to India also remained under pressure. On the supply side, U.S. crude oil production last week remained at a record 11 million bpd, a level it has largely been at since July. After rising by almost a third in the last two years, Jefferies said: "U.S. production growth will now significantly decelerate until 4Q19." Outside the United States, U.S. sanctions against major oil producer Iran, which from November will target oil exports, are fuelling expectations of a tighter market towards year-end. "The main driver of oil prices, in our view, remains the re-imposition of U.S. ... sanctions against consumers of Iranian oil," said Standard Chartered this week.

Fuel Oil Market (Sep 06)

The 380 cSt market extends losses, inventories slip - Asia's fuel oil market weakened today with 380 cSt cash premiums and prompt-month time spreads slipping further to fresh lows as expectations of higher arbitrage flows into Singapore continue to weigh on sentiment. The 380 cSt fuel oil cash premium slipped to $3.31 a tonne to Singapore quotes, its narrowest premium since July 5.The 380 cSt prompt-month time spread was trading at about $3.75 a tonne by Asia close, down from $4 a tonne on Wednesday and its lowest since June 15. Onshore inventories of fuel oil dropped to a two-week low of 16.068 million barrels, or 2.398 million tonnes, in the week ended Sept. 5, pulled down by lower weekly net imports into Singapore, official data showed on Thursday. In the week before, however, Singapore fuel oil inventories had jumped 17 percent, or about 362,000 tonnes, to a six-week high as net imports surged to a 15-month high.

The crack was stronger trading at -11.70

Economic data/events (Times are London.)

* 6pm: Baker Hughes rig count

* 6:30pm: ICE weekly commitments of traders report for Brent, gasoil

* CFTC weekly commitments of traders report on various U.S. futures and options contracts

* Africa Oil and Power conference in Cape Town, final day

Singapore 380 cSt

Oct18 - 430.50 / 432.50

Nov18 - 426.75 / 428.75

Dec18 - 423.50 / 425.50

Jan19 - 420.00 / 422.00

Feb19 - 416.50 / 418.50

Mar19 - 413.50 / 415.50

Q4-18 - 426.75 / 428.75

Q1-19 - 416.75 / 418.75

Q2-19 - 407.00 / 409.50

Q3-19 - 391.50 / 394.00

CAL19 - 390.25 / 393.25

CAL20 - 322.25 / 328.25

Singapore 180 cSt

Oct18 - 437.00 / 439.00

Nov18 - 434.50 / 436.50

Dec18 - 432.75 / 434.75

Jan19 - 430.25 / 432.25

Feb19 - 427.00 / 429.00

Mar19 - 424.25 / 426.25

Q4-18 - 434.75 / 436.75

Q1-19 - 426.75 / 428.75

Q2-19 - 418.50 / 421.00

Q3-19 - 406.50 / 409.00

CAL19 - 404.75 / 407.75

CAL20 - 345.25 / 351.25

Rotterdam 3.5%

Oct18 - 409.75 / 411.75

Nov18 - 405.75 / 407.75

Dec18 - 402.25 / 404.25

Jan19 - 399.75 / 401.75

Feb19 - 397.25 / 399.25

Mar19 - 394.75 / 396.75

Q4-18 - 406.00 / 408.00

Q1-19 - 397.75 / 399.75

Q2-19 - 389.00 / 391.50

Q3-19 - 370.75 / 373.25

CAL19 - 370.00 / 373.00

CAL20 - 310.50 / 316.50