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OILGRAM PRICE REPORT Volume 96 / Number 233 / December 5, 2018 / Prices effective December

OILGRAM PRICE REPORT

Volume 96 / Number 233 / December 5, 2018 / Prices effective December 4, 2018

Refiners await Beijing’s directions to resume US crude purchases

Countries open 90-day negotiation window China may push for crude imports during talks Market players keen to resume oil flows

Singapore—Chinese state-owned refiners are awaiting instructions from Beijing before resuming US crude purchases, and trading houses are evaluating options in the physical market following the trade agreement made between the countries. The US and China announced over the weekend they would resume trade negotiations and temporarily forgo further tariff hikes. The US agreed it would not raise the already 10% tariff on $200 billion worth of Chinese goods to 25%, which it had scheduled to implement January 1, for a 90-day period, during which both sides would negotiate a new deal.

US crude exports to China zeroed in October amid rising trade tensions and fears new tariffs would be slapped on oil by the Trump administration. Oil traders and executives said they remain cautious on resuming US flows to China due to market uncertainties and concerns over a narrow trading window until March, but market participants are keen to exploit the opportunity. “Theoretically, imports from the US are unlikely to resume immediately due to the long trading cycle between the two countries, and the three-month window from January 1 is too short,” a Beijing-based crude oil trader said, citing risks of cargoes being stranded on the water. But the Chinese government is likely to nudge state- owned companies to increase US crude imports to express sincerity during trade negotiations, he added.

(continued on page 12)

Oil edges higher, remains in holding pattern ahead of OPEC meeting

New York—Crude finished marginally higher on Tuesday as early session price support faded in afternoon trading. ICE February Brent settled up 39 cents at $62.08/b and NYEMX January WTI was up 30 cents at $53.25/b at market close. “The market saw continued strength from the idea that producers were in favor of doing something about output at the December 6 meeting and that some fears of lower demand growth might have eased due to 90-day truce,” Tradition Energy analyst Gene McGillian said. “But simmering underneath the market is concerns of excess supply and lower demand, and the market wasn’t able to hold its gains because of those.”

Market exuberance regarding a 90-day trade war truce between the US and China faded on Tuesday and equity markets sank, renewing concerns of reduced global oil demand growth going forward. At the G20 summit last weekend US President Donald Trump and Chinese President Xi Jinping reached an agreement that would leave the tariffs on $200 billion worth of Chinese products at 10% from the start of next year, rather than raising them to 25% as previously planned. Crude had been trading higher ahead of the US open on Tuesday after key OPEC members worked to reassure jittery markets of the group’s cohesion following Qatar’s

(continued on page 12)

InsIde thIs Issue

Market analysis

International crude: Tighter supply supports Forties

2

Americas crude: Marathon mulls Permian pipeline partners

4

Gasoline: Refinery trouble boosts USGC

5

Diesel: Med cargoes at 13-month low vs ICE gasoil

6

Gasoil: USGC jumps higher

6

Jet: Asia buying interest slow

7

Resid: Asia firms as fewer imports expected

8

Feedstocks: Naphtha firms in Asia

8

Gas liquids: US propane at summer lows

8

Tankers: 29 SOx scrubbers registered in gas fleet

9

News

Power outage curtails Enbridge petroleum pipeline operations: company 9

Pressure builds on Saudi oil minister at OPEC after Qatar snub US majors look to exit
Pressure builds on Saudi oil minister at OPEC after Qatar snub
US majors look to exit Azerbaijan’s main oil field
Refinery updates
10
10
12
STRONGER ARAB MEDIUM OSPS
TO DENT USGC MARGINS
($/b)
12
10
8
6
Arab medium
4
Mars
2
Maya
0
-2
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18

Cracking margin monthly averages Source: S&P Global Platts; Turner, Mason & Co.

www.platts.com

OILGRAM PRICE REPORT Volume 96 / Number 233 / December 5, 2018 / Prices effective December

Oilgram Price rePOrt

MaRkEt aNalySiS

Prices effective December 4, 2018

iNtERNatiONal CRUdE

tighter supply supports Forties

The North Sea crude market saw repeated trades Tuesday on back-end cargoes at levels which showed a slight backwardation in the last decade of the loading range. The Forties differential to North Sea Dated Strip moved to a premium Monday and held it Tuesday at 6 cents/b. Brent parcel B1203 was seen traded at Dated Brent plus 5 cents/b while, further out, Total sold Shell parcel B1204 flat to Dated Brent. In the paper markets, the recent strengthening of prompt Brent contracts for difference structure was partly a result of the Buzzard field outage, sources said. Forties production has slowed in recent weeks on the back of the Buzzard field’s shutdown after corrosion was spotted at a facility. “With distillate and fuel oil cracks so strong, refineries in the Amsterdam-Rotterdam-Antwerp region are used to having a heavier slate. Take Buzzard out and you get lighter crude,” a trader said. “I think [Buzzard] definitely has had an effect,” the trader said, adding the brief backwardation in prompt CFD structure was overlapping with the period, albeit unconfirmed, during which the Buzzard field should remain down. Brokered indications Monday showed at 10 cent/b backwardation between the weeks of December 3-7 and December 10-14. In Tuesday’s assessment, structure between these two weeks was assessed at 2 cents/b. In loadings, the majority of Forties crude loaded at the UK’s Hound Point terminal in November headed to China, according to data from Platts cFlow, trade flow software, continuing the trend seen in October. Based on estimates using 600,000 barrels for an Aframax and 2.05 million barrels for a VLCC, the Hound Point terminal exported 8.8 million barrels of Forties in November, of which 6.15 million barrels headed to China and South Korea combined. Overall exports were 2.05 million barrels, or one VLCC,

less than in October. November loadings of Forties consisted of four VLCCs and one Aframax. China alone should receive more than 4 million barrels of November-loaded Forties, or about 47% of the total volumes shipped out of Hound Point in the month. South Korea was set to take 23% of November exports while only 7% of the volumes were seen staying in Northwest Europe, according to Platts cFlow data. Forties crude continued to find its way east despite soaring freight rates. The dirty Hound Point-Far East route, basis 270,000 mt, reached a $7.2 million lump sum in November, the highest ever assessed by S&P Global Platts.

Urals discount widens

Russian Urals sour crude continued to weaken in Northwest Europe Tuesday amid lower demand in the second and third decades of December. In the Platts Market on Close assessment process, Trafigura sold a 100,000 mt cargo, basis CIF Rotterdam and loading December 18-22, at Dated Brent minus 40 cents/b to Total. This was weaker than the grade’s 30-day moving average of a 53 cents/b discount to the Med Dated Strip. Sellers from Northwest Europe were turning to the Mediterranean to look for buyers as most sellers in the south were said to have taken their volumes into their own systems. Total sold a 100,000 mt cargo of Urals to Turkey’s Tupras for December 5-20 arrival in a tender that closed last Tuesday with the level around Dated Brent plus 30 cents/b, market sources said. Neither Total nor Tupras were available for comment. In other tender news, a representative form Russia’s Surgutneftegaz said it was offering an injection cargo of 100,000 mt of Urals loading December 18-19 at the Baltic port of Primorsk. The tender will close Wednesday. In other news, Saudi Aramco raised the official selling prices of its four crudes – Arab Extra Light, Light, Medium and Heavy – loading in December and bound for Northwest

data InsIde thIs Issue

Product price assessments

 

Saudi Arabian Official Selling Prices

3

Asia

14

China

14

Fujairah

14

Arab Gulf

14

Indonesia

14

Asia product premium/discount assessments

14

Platts Index

14

European bulk

15

West Africa products

15

European feedstocks and blendstocks

15

New York/Boston

16

USAC CPL Linden

16

U.S. Buckeye pipeline

17

Chicago pipeline

17

Group Three

17

Atlantic resid/contract cargoes posted prices

17

Shale Value Chain assessments

17

U.S. Gulf Coast

18

West Coast pipeline

19

U.S. Gulf Coast pipeline cycles

19

West Coast waterborne

19

Latin America

20

Caribbean cargoes

20

Caribbean product postings

20

Gas liquids

20

Crude price assessments

Asia Pacific/Middle East spot crude assessments

21

International

22

Asia

22

North Sea

22

West Africa

22

London

23

Mediterranean

23

Canada

23

Platts Euro denominated crude oil assessments

23

United States

24

US domestic crude assessments London close

24

US crude assessments Singapore close

24

Canadian spot crude assessments

25

Crude oil postings

25

Latin America crude

25

Daily OPEC basket price

25

Spot tanker rates

26

Platts futures assessments Singapore MOC

26

Platts futures assessments

26

Futures settlements

27

Five-Day Rolling Averages

28

US wholesale posted prices

29

Feeder crudes

30

Weekly crude assessments

32

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

2

Oilgram Price rePOrt

Prices effective December 4, 2018

Europe and the Mediterranean. For delivery to Northwest Europe, the OSP for Arab Heavy was set at a $4.00/b discount to ICE Brent, the highest since September 2013. Similarly, the OSP for Arab Heavy bound for the Mediterranean was increased by $1.20/b to a discount of $3.20/b to ICE Brent, which was the highest OSP for the grade since S&P Global Platts first began reporting the numbers in 2007.

iraq urges OPEC to eye longer-term strategy

Iraq’s oil minister said Tuesday OPEC should consider both medium- and long-term strategies to achieve more stability on the global oil markets after his country’s economy suffered greatly due to the recent, dramatic fall in oil prices. Iraq, OPEC’s second largest oil producer behind Saudi Arabia, will look to be “positive and constructive” in efforts to help balance the oil market and support oil prices, oil minister Thamir Ghadhban said in a statement ahead of a key OPEC decision on output policy this week. Ghadhban also stressed the need to develop new ideas

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and proposals to address the current challenges and “not to shorten the solutions” by only reducing oil production. OPEC meets Thursday in Vienna to discuss output strategy, with Saudi Arabia, the UAE and other members pushing for a cut that they say will be needed to avoid a supply glut. S&P Global Platts Analytics forecasts a decision to cut 1.2 million-1.4 million b/d of production to help support oil prices which have lost more than a quarter of their value since early October. Ghadhban said the fall in oil prices was a “real concern” for Iraq and other producers. Iraq’s oil revenues slumped to $6.18 billion in November,

their lowest since February, after it obtained an average price of $61.10/b in November for its crude, $13.80 lower than the October price, ministry spokesman Assem Jihad said. The last time OPEC and its non-OPEC allies decided to cut production, Iraq was reluctant to trim its output but its oil minister appears more supportive this time mainly due to the steep fall in its oil revenues. “We will listen to the report of the technical committee on the conditions of the global market, and we will discuss this to the proposals that contribute to reaching an agreement between the producers to address the decline in oil prices,” Ghadhban said.

SaUdi aRaBiaN OFFiCial SElliNg PRiCES ($/barrel), dEC 4

 

Benchmark

Jan

Monthly change

deC

nOV

OCt

us(PGA page 1070)

Extra Light

ASCI

AAIQZ00

4.80

+ 0.60

4.20

2.80

2.80

Arab Light

ASCI

AAIRA00

2.90

+ 0.50

2.40

1.00

1.00

Arab Medium

ASCI

AAIRB00

1.20

+ 0.50

0.70

-0.60

-0.60

Arab Heavy

ASCI

AAIRC00

0.15

+ 0.60

-0.45

-1.75

-1.75

Prices FOB Ras Tanura

northwest europe(PGA page 1069)

 

Extra Light

ICE Brent

AAIQQ00

-0.95

+ 0.20

-1.15

-1.35

0.05

Arab Light

ICE Brent

AAIQR00

-1.60

+ 0.60

-2.20

-2.70

-1.80

Arab Medium

ICE Brent

AAIQS00

-2.85

+ 0.90

-3.75

-4.35

-3.35

Arab Heavy

ICE Brent

AAIQT00

-4.00

+ 1.20

-5.20

-6.00

-5.10

Prices FOB Ras Tanura

Mediterranean(PGA page 1069)

 

Extra Light

ICE Brent

AAWQK00

-0.85

+ 0.60

-1.45

-0.15

-0.60

Arab Light

ICE Brent

AAWQL00

-1.50

+ 0.70

-2.20

-1.90

-2.20

Arab Medium

ICE Brent

AAWQM00

-2.45

+ 1.00

-3.45

-3.15

-3.45

Arab Heavy

ICE Brent

AAWQN00

-3.20

+ 1.20

-4.40

-4.50

-4.60

Prices FOB Ras Tanura FOB sidi Kerir(PGA page 1069)

 

Extra Light

ICE Brent

AAUCS00

NA

NA NA

-1.00

0.40

-0.10

Arab Light

ICE Brent

AAUCU00

NA

NA NA

-1.75

-1.35

-1.70

Arab Medium

ICE Brent

AAUCW00

NA

NA NA

-3.00

-2.60

-2.95

Arab Heavy

ICE Brent

AAUCY00

NA

NA NA

-3.95

-3.95

-4.10

asia(PGA page 1068)

Super Light

(O+D)/2

AAIQU00

2.75

-2.00

4.75

5.45

4.85

Extra Light

(O+D)/2

AAIQV00

0.75

-1.50

2.25

2.55

1.80

Arab Light

(O+D)/2

AAIQW00

0.60

-1.00

1.60

1.70

1.10

Arab Medium

(O+D)/2

AAIQX00

-0.05

-0.75

0.70

0.50

-0.20

Arab Heavy

(O+D)/2

AAIQY00

-0.65

-0.40

-0.25

-0.65

-1.35

Prices FOB Ras Tanura

ASCI=Argus Sour Crude Index; BWAVE=ICE Brent Weighted Average; (O+D)/2=Average of Platts Oman and Dubai assessments

Sources: Saudi Aramco OSP differentials prior to July 2017 were set against BWAVE.

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

3

Oilgram Price rePOrt

Prices effective December 4, 2018

aMERiCaS CRUdE

Marathon mulls Permian pipeline partners

Marathon Petroleum said Tuesday it is in “exploratory discussions” with ExxonMobil and Plains All American to “combine efforts” for a Permian-to-US Gulf Coast crude pipeline in the interest of capital efficiency while reducing the risk of pipeline overbuild.

Marathon’s head of Andeavor Logistics, Don Sorensen, said on the company’s analyst day webcast that Marathon is still pursuing a parallel path for its own Permian Gulf Coast pipeline. Marathon’s MPLX has a stake in the PCG, along with Delek, Energy Transfer Partners and Magellan, which is expected in-service in the fourth quarter of 2020. The line is expected to run from Midland, Texas, to Nederland, Texas, on the US Gulf Coast. ExxonMobil and Plains in June joined forces to build

a 1 million b/d pipeline to deliver crude and condensates from multiple Permian Basin locations to the Texas Gulf Coast by late 2020 or early 2021.–Janet McGurty

Brazil’s exports soar on subsalt growth

Brazil boosted crude oil exports in October amid growing output from subsalt fields as state-led producer Petrobras ramped up production from four new floating production units installed earlier this year, according to data released Tuesday by the National Petroleum Agency, or ANP.

Oil exports jumped 80.3% year on year in October to

  • 47.959 million barrels, up from 26.599 million barrels in

October 2017, the ANP said. October’s exports were also 16.2% higher than the

  • 41.269 million barrels exported in September, the ANP said.

Year to date through October, Brazil oil exports

were 7.1% higher at 347.8 million barrels, according to the ANP. The upswing came as Petrobras continued to add fresh production capacity to subsalt fields, installing four new floating production, storage and offloading vessels, or FPSOs, while economic activity in Latin America’s largest economy continued to sputter.

imports at three-year high

Imports, meanwhile, jumped to the highest level in nearly three years in October, despite the increase in domestic output, the ANP said. Petrobras, which controls about 98% of Brazil’s installed refining capacity, typically imports crude grades for lubricants production. Brazil imported 10.608 million barrels in October, up from 5.770 million barrels in October 2017, the ANP said. T

Oilgram Price rePOrt Prices effective December 4, 2018 aMERiCaS CRUdE Marathon mulls Permian pipeline partners Marathon

Oilgram Price rePOrt

Volume 96 / Number 233 / December 5, 2018

Oilgram Price Report is published every business day in New York and Houston by

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4

Oilgram Price rePOrt

Prices effective December 4, 2018

That was the highest level of crude imports since December 2015, when Brazil imported 11.485 million barrels. October’s imports were also up from 4.954 million barrels in September, the ANP said.

US’ lOOP Sour storage costs increase

Storage costs for the US crude blend LOOP Sour have reached their highest values in about a year as a contango oil market increased demand for storage, according to results from the monthly auction co-hosted by the Louisiana Offshore Oil Port and Matrix Markets. The oil terminal auctions each month capacity allocation contracts, or CACs, which grant the owner the right but not the obligation to store LOOP Sour crude in cavern. Each CAC is worth 1,000 barrels of LOOP Sour, a blend whose component crudes may include Mars, Poseidon and Segregation 17. Segregation 17 can comprise Arab Medium, Basrah Light and Kuwait. In Tuesday’s auction, LOOP found buyers for 6,035 CACs, or 79% of the total put up for grabs. LOOP has sold about 6,460 CACs on average in 2018 auctions. Although the most-recent total sold is below the average, values for CACs continued their gradual strengthening. March 2019 CACs cleared at 10 cents/b. Prices were last higher in the November 2017 auction, the last auction before LOOP lowered the minimum allowable bid to 5 cents/b. CAC values hovered around or slightly higher than the minimum bid for most of the year; however, the contango structure which is existing since mid October has brought interest back to the LOOP Sour market. LOOP Sour was assessed Monday at a 25 cents/b discount to Mars, or cash WTI plus $3.10/b. The M1-M2 outright spread for LOOP Sour was 16 cents/b contango, while prompt-month CACs cleared for 5 cents/b in the Tuesday auction.

gaSOliNE

Refinery trouble boosts USgC

The US Gulf Coast moved higher Tuesday, supported by a regional refinery glitch. An attempt to restart the fluid catalytic cracking unit at ExxonMobil’s 362,300 b/d Beaumont, Texas, refinery was aborted Monday, sources said. Platts previously reported that the 113,000-b/d gasoline- and diesel-producing unit was shut on October 10 for maintenance and was scheduled to be restarted on December 1. An ExxonMobil spokeswoman did not return a request for comment. Conventional grade gasoline rose 65 points day on day to the NYMEX January RBOB futures contract plus 0.65 cent/gal. Conventional gasoline traded at futures plus 0.75 cent/ gal level three times in the Market on Close Assessment process and was left offered at that level. CBOB traded once in the MOC at futures minus 6.15 cents/gal and was assessed at that same level, rising 85 points on the day. With gasoline differentials rising, Line 1 space on the Colonial Pipeline was assessed 85 points weaker at 0.50 cent/gal on the back of a heard trade at that level, its weakest assessment since November 7, Platts data shows. Gasoline differentials along the US Atlantic Coast moved lower Tuesday, amid a backwardated market and what sources described as ‘another slow day’. Benchmark barge RBOB fell 50 points day on day to the NYMEX January futures contract plus 1.70 cents/gal. RBOB on the Buckeye Pipeline was heard to trade for December 10 at futures plus 1.70 cents/gal. Buckeye Pipeline and barge barrels were assessed level to each other. CBOB also fell 50 points day on day and was assessed level to RBOB. Along the US West Coast, the differential for low-RVP Los Angeles blendstock rose after six consecutive days of declines.

December delivery Los Angeles CARBOB rose 2 cents to NYMEX January RBOB plus 8 cents/gal on trades at that level, with bids heard as low as 4 cents/gal over futures. The boost Tuesday followed a period of “builds in the market and refineries getting back online,” a second US light ends source said. No large blendstocks or gasoline cargoes landed on the West Coast from November 26 through Sunday night, according to US Census data made public Monday night. Some 47,000 barrels of regular and premium gasoline from British Colombia aboard the Island Trader docked at Tacoma, Washington, November 27, with Parkland as shipper and Chevron as consignee, the data showed.

average US pump prices fall on year

Automotive club AAA says that the average pump price for standard grade gasoline across the US on Monday was lower than it was one year ago, a first in 18 months. This view lines up with a Tuesday analysis of data from DTN published daily by S&P Global Platts, which showed that rack prices in multiple US cities hit multi-year lows at the end of November. AAA reports the national average price for standard grade gasoline at $2.46/gal Monday, two cents below the year-ago price. The same data showed the national pump price was 31 cents/gal cheaper than a month ago and that 24 states saw gas prices drop double digits in the past week. AAA attributes this trend to weaker oil markets. “Cheap crude oil prices are driving fuel savings at the pump,” Jeanette Casselano, AAA spokeswoman, said in a company blog post. “Last week, crude dropped to its lowest point of the year; however, this week’s OPEC meeting could cause crude oil prices to jump if the organization decides to reduce crude production.” While Platts does not calculate an average pump price for the US, rack price data from DTN for key US cities seems to gel with AAA’s view. On November 29, the rack price for unleaded,

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

5

Oilgram Price rePOrt

Prices effective December 4, 2018

unbranded gasoline in Houston and Chicago hit $1.3606/gal and $1.4072/gal, respectively, their lowest reported levels since November 2016. On the same day, the same rack price in New York City was reported at $1.464/gal, its lowest level since June 2017. Rack prices in these cities have recovered slightly in the first days of December, but still remain below historic norms. Gasoline prices are so weak now that some US gasoline cracking margins have flipped to negative. The crack spread between NYMEX RBOB futures in New York Harbor and Brent crude oil futures has been negative since the end of October, Platts data showed. In Houston, the WTI to conventional grade gasoline cracking margin averaged less than $2/b in November after averaging more than $12/b in November 2017.

diESEl

Med cargoes at 13-month low vs iCE gasoil

Mediterranean cargoes of ULSD fell to a 13-month low against ICE low-sulfur gasoil futures Monday as prompt supply grew while spot demand slowed down ahead of the end of the year. CIF ULSD cargoes were assessed at a $1.50 cents/mt discount to front-month ICE LSGO future Tuesday, down from a $3.50/mt premium Friday. This is quite a turnaround from mid-November when CIF Med ULSD cargoes hit a three-and-a-half-year high of a $19.25/mt premium over front-month ICE LSGO. The CIF Mediterranean ULSD cargo market has been falling over the last two weeks on healthier supply due mainly to the resumption of normal loadings from Russian Black Sea ports, notably from Tuapse, where bad weather had led to cancellation of loadings in November. Moreover, increased arbitrage volumes from East of Suez were arriving in the Mediterranean from the end of November onward due to the re-opening of this arbitrage in November. “There are many cargoes around, nothing distressed, but some large cargoes are coming from the Persian Gulf, and the

month of December is generally quieter in term of demand as some people rush to get supply in November,” a trader said. Diesel arrivals into the Mediterranean from the East have increased recently, with four vessels arriving into the region in the last seven days carrying diesel from the East of Suez. The Sti Carnaby, Jo Rowan, Sti Spiga and Orange Stars all arrived into Mediterranean ports in the last seven days, carrying a total of around 350,000 mt of diesel, according to S&P Global Platts vessel tracking software cFlow and shipping sources. In Asia, the market was bearish for 10 ppm cargoes on persistently lackluster demand and ample supply. Trade participants said China’s surprise move last week to allocate extra gasoil quota export volumes for the end of the year had heaped further downward pressure on an already depressed market, which was already grappling with poor demand. The cash differential for FOB Singapore 10 ppm sulfur gasoil continued to drift lower, reaching a fresh year-to- date low at minus 55 cents/b to the Mean of Platts Singapore Gasoil assessments. This is the lowest the cash differential has been for the Asian ultra-low sulfur gasoil grade since the sulfur content in the Platts Asian benchmark gasoil grade was changed to 10 ppm from 500 ppm on January 1. With regional demand down, spot supplies were readily available. Taiwan’s CPC Corp. offered 300,000 barrels of 10 ppm sulfur gasoil for loading from Kaohsiung over January 1-20 in a tender closing December 5.

October’s diesel imports, however, were more than double the 2.975 million barrels imported in September, the ANP data showed. September’s diesel imports were the lowest since January 2016, according to the ANP. Gasoline imports also continued to retreat in the year on year period in October, primarily because of increased competition from biofuel alternative hydrous ethanol. Brazil imported 546,623 barrels of gasoline, down 72.8% from 2.010 million barrels in October 2017, the ANP said. October’s gasoline imports were also down 8.6% from 598,317 barrels in September, the ANP said. September’s gasoline imports were also the lowest since January 2016, according to the ANP. Both diesel and gasoline have faced increased competition from biofuels in 2018, with domestic output of the renewables targeting imported barrels. Brazil increased its biodiesel-diesel blend sold at the pump to 10% on March 1, with plans to increase the mandate to 15% by 2023, according to the Mines and Energy Ministry. Hydrous ethanol, meanwhile, replaced gasoline in tanks of flex-fuel vehicles because of an ample sugarcane harvest and low sweetener prices that led to ample supplies and low prices for the biofuel. Diesel and gasoline imports, however, could see growth in coming months should economic activity increase. In addition, the end of the sugarcane harvest season means that hydrous ethanol prices will start to rise, making gasoline more economically attractive to local motorists until the next harvest season starts in March 2019.

Brazil’s imports decrease on year

Imports of diesel and gasoline, Brazil’s two most-widely consumed refined products, rebounded in October from the nearly three-year lows posted in September, the ANP data showed.

Brazil imported 7.023 million barrels of diesel in October, a decrease of 17.0% from 8.463 million barrels in October 2017, the ANP said.

gaSOil

USgC jumps higher

US Gulf Coast differentials soared 3.25 cents/gal on Tuesday pushed by bid activity during the Market on Close assessment process, while the Atlantic Coast saw scant value variations. S&P Global Platts assessed HSHO for the scheduling day of Colonial Pipeline’s 68th cycle at NYMEX January

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

6

Oilgram Price rePOrt

Prices effective December 4, 2018

ULSD futures contract minus 19.75 cents/gal, after bids went up to minus 20 cents/gal during the MOC. Scheduling days are traditionally the busiest in a cycle. It was HSHO highest differential on the Gulf since it reached minus 18 cents/gal on November 26. Also on the Gulf Coast, ultra low sulfur heating oil retreated 20 points day on day and was assessed at minus 13 cents/gal. One of the components of that assessment, the ULSHO regrade to Gulf Coast ULSD for Colonial’s prompt cycle was assessed at minus 2 cents/gal, after a trade heard at that level. The regrade was up from minus 2.15 cents/gal on Monday. The other component, ULSD on the Gulf Coast, was set at NYMEX January ULSD futures minus 11 cents/gal, down from minus 10.65 cents/gal on Monday. Bids and offers were unable to move the value for space on Colonial Pipeline’s distillates-only Line 2, which remained at plus 4.75 cents/gal. Differentials for heating oil on the Atlantic Coast were mostly unmoved Monday. HSHO barges and low sulfur heating oil in New York Harbor remained assessed by S&P Global Platts at NYMEX January ULSD futures contract minus 9.25 cents/gal, while low sulfur heating oil barges remained at mines 2.65 cents/gal. Regarding ULSHO on the Atlantic Coast, barges of the grade kept a differential of minus 1.50 cents/gal. However, barrels delivered by Colonial Pipeline were assessed at minus 1.15 cents/gal, after a trade heard during the day at that level. On Monday, ULSHO barrels had been set at minus 1.05 cents/gal.

Rhine level rises

Northwest Europe continued to brace for higher water levels along the Rhine, and the barge market firmed. The 1000 ppm FOB ARA barge discount to ICE LSGO strengthen to $11.25/mt, up $3/mt on the day. The level at the key choke point of Kaub, Germany, has

been rising sharply this week, which should ease logistical issues in moving barges along the key waterway. Kaub was pegged at 122 cm Tuesday and forecast to rise above 200 cm Thursday. The German Federal Institute of Hydrology said November 29 that save “for a dramatic turn of events, extensive rainfall over a period of several months would be necessary” to keep the level sustained. But for the week ahead, the rise in water should give shippers the opportunity, if only temporarily, to move larger volumes up and down the river. Levels had not been above 80 cm at Kaub for more than two months, according to WSV data. The sharp fall in barge freight rates had not, however, boosted spot demand for barges of product – such as diesel or gasoil – as much as could have been expected, according to sources.

JEt

asia buying interest slow

The stubborn supply overhang and weak buying interest continued to exert pressure on the Asian jet fuel/kerosene spot market Tuesday, and cash differentials continued to head deeper into discount territory. The FOB Singapore spot discount to MOPS strip weakened to 89 cents/b Tuesday, out from a 68 cents/b discount a week ago. Further compounding these issues, the relative weakness of gasoil against jet was encouraging refiners to maximize jet fuel production. Platts assessed the physical regrade spread at plus 99 cents/b Monday, 48 cents/b lower on the day. While there remained some buying interest from the US West Coast, some quarters of the market said that freight costs could soon make such flows unviable. Most recently, Valero was heard to have taken the BW Egret to load 40,000 mt of jet from South Korea to the US West Coast over December 12 at a lump sum of $1.35 million – $33.75/mt.

In the contract market, South Korean refiners were heard to still be engaged in their 2019 term supply talks. A North Asian refiner noted that the term cargo talks this year were especially challenging, against the back drop of the International Maritime Organization’s impending sulfur restriction on marine fuels. “Buyers are not willing to take the levels refiners are

offering

still quite a gap,” a North Asian trader with

... knowledge of these talks said.

Europe softens as imports lengthen supply

The CIF NWE cargo premium fell to $36/mt Tuesday from $37.25/mt Monday, and the FOB FARAG barge premium dropped to $31/mt from $36.50/mt. Jet fundamentals were seen as pointing to the downside with premiums falling two days in a row after some tightness in the prompt seen last week disappeared. Ample volumes of physical product are scheduled to arrive into the region over December – pegged at around 1.3 million mt, according to S&P Global Platts trade flow software cFlow – while demand remains seasonally low during a period of the year when the frequency of some flight routes are reduced or even canceled. The arbitrages between the East of Suez and US Gulf Coast to Europe are open, according to market participants. A supply overhang and weak buying interest in Asia are being compounded with the relative weakness of gasoil against jet, encouraging refiners to maximize jet fuel production in Asia. A weak Singapore Exchange of Futures for Swaps – the spread between the FOB Singapore 10 ppm gasoil front- month swap and the corresponding ICE LSGO future – had increased the likelihood of more arbitrage barrels being pulled from east to west, after reaching minus $24.50/mt November 27, its lowest level since October 2017. Freight rates for barges going from the Amsterdam- Rotterdam-Antwerp hub to Germany and Switzerland were falling heavily as Rhine water levels rose sharply and were forecast to rise further this week, said market sources.

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

7

Oilgram Price rePOrt

Prices effective December 4, 2018

RESid

asia firms as fewer imports expected

Tight fundamentals continued to lend support to the Singapore HSFO market, as the spot 180 3.5% FOB Singapore premium to MOPS strip firmed to $1.16/mt Tuesday. This was up 17 cents/mt on the day, and 4 cents/mt over the 30-day moving average, according to S&P Global Platts data. Traders expect Singapore will receive about 4 million mt of fuel oil from the west in December, less than in November, while the inflow from the Middle East is seen stable over the same period at 1.5 million-2 million mt. “The market is still short,” a trader based in Singapore said. In the latest import news, Trafigura chartered a 130,000-mt tanker Stena Superior to move fuel oil from Rotterdam to Singapore loading December 9 at $3.9 million, shipping sources said. Open interest in the front-month December Singapore 380 CST HSFO outright swap rose 11% in November to 955,000 mt as of November 29, ICE data showed. Open interest for the December Singapore 180 CST HSFO outright swap also continued to trend higher in November, rising 20% month on month to 6.674 million mt as of November 29, ICE data showed. In tender news, India’s Bharat Petroleum Corp. Ltd. sold 40,000 mt of 180 CST HSFO with maximum 3.5% for loading over December 12-14 from STS Mumbai to South Korea’s Posco Daewoo at a discount of around $13/mt to MOPS 180 CST HSFO assessments, FOB.

FEEdStOCkS

Naphtha firms in asia

Arbitraged naphtha cargoes continued to find their

way into Asia from other regions, but imports have not weakened the market.

The spot CFR Japan vs MOPJ strip differential

increased to minus $4.75/mt Tuesday, in from minus $9.13/mt late last week. P66 chartered a Medium Range tanker to move a 38,000 mt naphtha cargo from the US Gulf to the Far East, at a lump sum rate of $1.675 million, shipbrokers said. In the Middle East, Kuwait Petroleum Corp., is offering 50,000 mt of full range naphtha with minimum 70% paraffin content for December 29-30 loading and 24,000 mt of light naphtha with minimum 85% paraffin content for December 30-31 loading. The tender closes December 4 at 1000 GMT, with same day validity. In steam cracker news, Japan’s JXTG Nippon Oil & Energy will shut its naphtha-fed steam cracker in Kawasaki from December 10 for emergency repairs for around ten days. The cracker is able to produce 404,000 mt/year of ethylene and 260,000 mt/year of propylene. The company has another steam cracker, which is able to produce 515,000 mt/year of ethylene and 300,000 mt/ year of propylene, is currently operating normally. South Korea’s LG Chem is currently increasing the operating rate of its naphtha-fed steam cracker in Yeosu after restarting the unit last Wednesday, a company source said Monday, adding that operating rate would likely hit 100% later this week. The cracker, has a capacity of 1 million mt/year of ethylene and 550,000 mt/year of propylene. Yeochun NCC is also seeking open-spec naphtha supplies for second-half January delivery. The tender closes December 4. Also, China’s Secco plans to restart its naphtha-fed steam cracker in Shanghai Wednesday after annual

maintenance, a source close to the company said Tuesday. The steam cracker, which shut in early October, is able to produce 1.09 million mt/year of ethylene and 500,000 mt/year of propylene. Sources said the restart was delayed as part of efforts to minimize air pollution during international conferences in Shanghai over November.

gaS liqUidS

US propane at summer lows

The US Gulf Coast propane cargo premium dipped below 5 cents/gal Tuesday for the first time since August. FOB USGC propane cargoes fell 37.5 points to 4.75 cents/gal over cavern product based on market indication of value below 5 cents/gal for early January loaders. A prompt cargo, for loading December 9-10, was heard done at a 5-cent/gal premium with offers heard at 5 cents/ gal for later dates. VLGC freight rates have steadily fallen since reaching two-year highs in October at $83.50/mt and $46/mt. The route to Japan fell $1 to $70/mt while the route to Europe rose $1 to $35/mt Tuesday. December non-LST propane rose 2.25 cents to 73.50 cents/gal, or 58% of front-month crude futures, based on a trade at that level in the Platts Market on Close assessment process. Butane rose 6.875 cents to 84 cents/gal, flipping into a 25-point backwardation into January. Isobutane’s premium narrowed to 2 cents/gal over normal butane, down from 10 cents/gal on Monday. Ethane rose 50 points to 31.25 cents/gal, maintaining a 30-cent/MMBtu premium over gas futures.

Banagas awards term tender to itochu

Bahrain National Gas Company, or Banagas, has sold 377,000 mt of LPG for loading over January 1-December 31, 2019 to Japanese trader Itochu through a term tender, a trade source said. The volume comprises 200,000 mt of propane and 177,000 mt butane. The award level was at a small premium to the average of Saudi Aramco’s contract prices for propane/butane and Argus FOB assessment on an FOB Sitra basis, the source said, adding that the tender attracted around five to six bids. The volume exceeded its 2018 term supply of 222,000 mt LPG, comprising 121,000 mt of propane and 101,000 mt

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

8

Oilgram Price rePOrt

Prices effective December 4, 2018

of butane. The current term contract, also to Itochu, was concluded at a single-digit premium to the average of Aramco’s CPs for propane/butane and Argus FOB assessment, FOB. The increased volume for 2019 comes as Banagas started operations last month at its third Central Gas Plant, or CGP-III.

taNkERS

29 SOx scrubbers registered in gas fleet

A total of 29 installed sulfur oxide, or SOx, scrubbers have been registered in the current gas carrier fleet, about a year before the International Maritime Organization’s bunker sulfur limits are lowered to 0.5% on January 1, 2020, from 3.5% currently, Grieg Shipbrokers said. An additional 17 ships have the options to install scrubbers, it said in a recent report. Among the 75 gas carriers under construction, 37 will have a scrubber installed and three more have options to install the equipment. Grieg said there are also a handful of carriers with dual- fuel LNG or ethane engines, some of which intended to run on boil off gas from cargo. Very large gas carriers, or VLGC majors BW LPG and Dorian LPG have plans to retrofit parts of their existing fleet with dual-fuel LPG engines, while Exmar has two units with such engine under construction, it added.

The installation of scrubbers allows shipowners to continue using 3.5% sulfur bunkers as the exhaust gas cleaning systems bring emissions in line with the 0.5% sulfur limit on board the vessel. Hybrid scrubbers provide the flexibility to either operate in open-loop or closed-loop mode, which either essentially washes the sulfur into the ocean or collects the sulfur on board the vessel and disposing of it onshore. VLGCs for transporting LPG, and vessels under

construction are overrepresented in the scrubber and dual-fuel statistics, reflecting trends from other shipping sectors, the report said, adding that larger ships consume relatively more fuel and saves more from running on cheaper HSFO or gas. Bigger vessels also have more standardized trade routes, making it easier to plan bunkering and have more space on board for the scrubber equipment. It is less costly to install scrubbers or dual-fuel engines on a newbuild compared to retrofitting an existing ship, Grieg said. Including options and vessels on order, 25% of VLGCs will have scrubbers or dual-fuel gas engines, 13% of the large gas carriers, or LGCs, 15% of the midsized gas carriers, or MGCs, 9% of handies and just 1% of the

smaller gas carriers, Grieg said. Scrubber suppliers’ backlogs have risen substantially this year and will likely rise in 2019, it said, adding that lead time is around 15 months, making it difficult to order a scrubber now and having it installed before 1 January

2020.

americas aframax rates rebound

A fixing flurry on the Americas Aframax segment saw rates higher on the 70,000mt US Gulf Coast-UK Continent market Tuesday, increasing w10 day on day. Early in the day, Mercuria and Vitol were both heard to have placed Aframax vessels on subjects for the trans- Atlantic route at w95, the Seamusic and the Maran Atlas, respectively. On the Caribbean-UK Continent route, Repsol was heard to have placed the Jag Laxmi on subjects at w100, to load December 14-15. Later, Occidental placed a to-be-nominated Minerva vessel on subjects for the USGC-UK Continent route at w105. The 70,000mt USGC-UK Continent route was assessed at w105, up w10 day on day. After consistent daily decreases in freight costs since mid-November, the USGC-UK Continent market is expected to take a turn upward, according to market sources. Freight also saw increases on the VLCC segment amid a tightness of available tonnage. Unipec placed a to-be-nominated Tankers International vessel on subjects for a USGC-China run at lump sum $9.4 million, with an option for discharge in Singapore at lump sum $8.4 million. The vessel is set to load on January 1. The 270,000mt USGC-China route was assessed at lump sum $9.4 million, up $600,000 day on day. Though freight increased on the Aframax and VLCC

segments, the Suezmax market saw rates continue to drop.

NEwS

Power outage curtails Enbridge petroleum pipeline operations: company

New York—A power outage in Saskatchewan has resulted in temporary outages or reduced flows on several Enbridge crude and petroleum liquids pipelines, the company said Tuesday.

“We can confirm that operations on our Mainline system have been impacted, resulting in temporary outages or reduced flow rates on Lines 1, 2A, 3, 4, 13 and 67,” Enbridge said in a press release. Enbridge did not have an estimated timeline when operations will return. The company said it is working with SaskPower “to

restore power to our operations as soon as possible.” Enbridge’s 237,000 b/d Line 1 transports natural gas liquids, light crude and refined products from Edmonton, Alberta, to Superior, Wisconsin. The 442,000 b/d Line 2A ships condensates and light crudes from Edmonton to Superior. Enbridge’s 390,000 b/d Line 3 moves condensates and light crudes from Edmonton to Hardisty, Alberta, while the

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

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Oilgram Price rePOrt

Prices effective December 4, 2018

796,000 b/d Line 4 carries heavy crude from Edmonton to Cromer, Manitoba, and medium and light crudes from Clearbrook, Minnesota, to Superior. The company’s 800,000 b/d Line 67 carries heavy crude from Edmonton to Superior. Enbridge’s 180,000 b/d Line 13, also known as the Southern Lights Pipeline, carries condensates from the Chicago area to Edmonton. Enbridge said in November it is evaluating re-reversing the line to carry crude from Western Canada to the US

Midwest. Jeff Mower, Janet McGurty

Pressure builds on Saudi oil minister at OPEC after qatar snub

Falih has won praise from money managers trump pressure complicates Saudi policy iran has signaled opposition to new deal

London—Shaken by Qatar’s surprise plan to drop out of the producer group, OPEC still needs to reassure a nervous oil market when it meets later this week. Responsibility for delivering the required assurance in difficult circumstances falls to Saudi energy minister Khalid al-Falih. The former Aramco engineer faces his toughest test at Thursday’s meeting in Vienna after Doha’s shock move to walk out on the group after almost 60 years of membership. Saudi Arabia — OPEC’s largest exporter — may no longer have the political leverage to push through a deal after a bruising couple of months following the murder of Saudi dissident journalist Jamal Khashoggi. Falih has won praise for his ability to communicate Saudi oil policy in a language money managers and hedge funds can understand. His predecessor, Ali Al-Naimi, had a frostier relationship with Wall Street, which he often blamed for artificially distorting markets and making OPEC’s job harder. “What [Falih] has done very well through his dialogue and his attempts to understand the oil market is that his

messaging is sharper,” said Helima Croft, global head of commodity strategy for investment bank RBC Capital Markets. “Now, there are circumstances beyond his control, and he’s had to evolve quickly.” Saudi Crown Prince Mohammed bin Salman — who took control of Saudi oil policy two-years ago — has launched a diplomatic war against Qatar; embarked on a real conflict in Yemen and moved the kingdom closer politically to the Kremlin. The heir to the Saudi throne is also at the center of the backlash following Khashoggi’s killing, in which he denies involvement. All this has played on the nerves of oil markets and weighed on sentiment. It now falls to Falih to steady the ship. Rebuilding the confidence of fickle money managers would be a start. Hedge funds have aggressively cut their exposure in recent months. Net length in oil futures contracts fell to 414 million barrels early last month, its lowest since July 2017, according to the IEA. “Money managers are significantly more adept at changing their positions than the officials are in making their decisions, so it is inherently an unbalanced relationship,” said Ed Morse, global head of commodities research at Citigroup.

trump pressure

If Falih fluffs his lines as he arguably did in May 2017 when provided no clear guidance on OPEC’s intentions

to unwind cuts, he will be punished by markets. Already on edge, ICE Brent futures have tumbled almost 30% in the past two months on fears of a supply glut and waning confidence in OPEC’s resolve to withstand pressure from the US to keep pumping.

US President Donald Trump is also muddying the field for Falih. Any decision resulting in an immediate spike in oil prices could provoke criticism from Trump through his Twitter account. Falih also faces discontent among some of OPEC’s smaller members after its recent production surge, which has caused the price slump and Qatar’s exit. Saudi officials have said the kingdom’s output surpassed 11 million b/d in November, after it pumped a near-record

10.67 million b/d in October, according to the latest S&P Global Platts OPEC survey. Iran — now the group’s fourth largest producer — blames the kingdom for the current fall in prices and has signaled its opposition to a new deal. Maintaining a cordial working relationship with Iran in the wake of US oil sanctions will be another challenge for Falih to overcome. Markets will pay a close eye on the detail of any deal agreed between OPEC and its allies, led by Russia, who join the talks on Friday. Fundamentals suggests an adjustment to output will be required to stave off an oversupply in the first half of 2019, several ministers and delegates have said. However, in the days running up to the meeting no firm agreement on how much to cut, or how to allocate quotas has clearly emerged. Officials have cited market forecasts showing a surplus of 1 million to 1.4 million b/d in the months ahead. Against this fraught backdrop, Qatar may have had the first word but Saudi Arabia’s Falih will have the last.

US majors look to exit azerbaijan’s main oil field

aCg accounts for over 70% of azeri oil BP struggling to stem aCg output decline Pivot to US shale from mega-projects

London—Chevron and ExxonMobil are looking to sell their minority stakes in Azerbaijan’s flagship oil complex, Azeri- Chirag-Deepwater Gunashli (ACG), leaving BP and state- owned Socar as the dominant shareholders in the aging Caspian Sea asset. In a statement Tuesday, Chevron said it had “decided to initiate the process of marketing, with a view to a potential sale,” its stakes in the ACG fields and Baku-Tbilisi-Ceyhan (BTC) pipeline, amounting to 9.57% and 8.9% respectively. A separate Reuters report said ExxonMobil was also marketing its 6.79% stake in ACG and 2.5% stake in BTC.

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

10

Oilgram Price rePOrt

Prices effective December 4, 2018

Citing industry sources, the report said ExxonMobil is hoping to raise up to $2 billion from the sale of its stake in the assets. ExxonMobil, which only bought its stake in the BTC pipeline in February, said it did not comment on “rumors or market speculation.” Both US majors formed part of the Azerbaijan International Operating Company set up to develop the fields almost 25 years ago as the Caspian state emerged

AZERBAIJAN'S OIL AND GAS INFRASTRUCTURE

from Soviet rule to invest in its offshore oil and gas potential. Chevron later grew its ACG stake in 2005 when it acquired Unocal. Oil production at the fields began in 1997 but output has been broadly in decline since output peaked at around 800,000 b/d in 2009. BP, as operator, has stemmed the decline in overall ACG production this year, with output roughly unchanged at 588,000 b/d over the first nine months of this year,

IRAN Absheron Baku AZERBAIJAN Umid Shah Deniz RUSSIA Caspian Sea ACG eld group Oil pipeline Gas
IRAN
Absheron
Baku
AZERBAIJAN
Umid
Shah Deniz
RUSSIA
Caspian Sea
ACG eld group
Oil pipeline
Gas pipeline
Oil/gas eld
Gas processing plant
Oil re nery
Port

Source: EIA

and has kept spending relatively stable, with $367 million of operational spending and $825 million of capital expenditure, its latest statement from Azerbaijan shows. At current levels, the fields still account for over 70% of Azerbaijan’s 800,000 b/d of total oil production. But ACG production is still expected to decline over the long term, and BP aims to replenish its assets through exploration in the Caspian Sea. ACG output is now 11% lower than five years ago, although it got a boost in 2014 from a new platform, West Chirag.

shift to us shale

The BTC pipeline to the Mediterranean Sea is an occasional conduit for bringing oil from other Caspian countries such as Kazakhstan to its destination port at

Ceyhan in Turkey. But Kazakhstan’s oil producers appear increasingly committed to the CPC pipeline that runs across southern Russia to Novorossiisk as the main

export route.

For Chevron, Azerbaijan represents a relatively

modest share of its production, while the California-

based major is focused on expansion at its giant Kazakh

joint venture, Tengizchevroil, on the east coast of the

Caspian, expected to lift production there to more than 900,000 b/d.

The retreat also comes as Chevron and ExxonMobil have signaled an upstream pivot to focus on US shale oil plays which, particularly in the wake of the 2014 oil price slump, focused attention on the benefits of short-cycle

shale developments to help stabilize cash flows as an

antidote to riskier, big-ticket spending on long-term, mega projects such as ACG. The international oil companies all reduced their

stakes in ACG last year as part of a 25-year extension of

the production sharing contract to 2049 that left BP with 30.37% and raised Socar’s stake to 25%. The other ACG partners are Japan’s Inpex, with 9.31%, Norway’s Equinor (7.27%), Turkey’s TPAO (5.73%) Japan’s Itochu (3.65%), and

India’s ONGC Videsh (2.31%). Nick Coleman, Robert Perkins

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

11

Oilgram Price rePOrt

Prices effective December 4, 2018

Refiners await Beijing’s directions to resume

importing US crude oil,” a Unipec official said.

us crude purchases ...

from page 1

State-owned oil refineries were major consumers of US crude, purchased largely through Unipec, the trading arm of Sinopec, China’s largest refiner by capacity. Its crude procurement strategy depends on both the government’s mandate and commercial requirements. This was seen in May this year when US Secretary of Commerce Wilbur Ross led trade discussions with Beijing to reduce the US trade deficit by boosting agricultural and energy exports to China. The talks were followed by Unipec’s purchase of around 16 million barrels of US crude oil for loading in June, the biggest monthly volume of US crude ever lifted by the company, although volumes fizzled out when trade tensions escalated. Since them, bilateral oil trade between the two countries has dried up, and Chinese refineries have shunned US barrels despite no firm tariffs imposed by Beijing. That caution persists. “[The truce] is a relief, and there will be opportunity to trade, but it is difficult to say when we will resume

CHINA’S TOP CRUDE SUPPLIERS IN OCTOBER

“We need to discuss what to do as the next step,” a second Unipec executive said. “We don’t have a final decision yet.”

US crude trickles in

China’s crude oil imports from the US fell to zero in October for the first time since February 2017, General Administration of Customs data showed. November volumes also remained thin. As of Tuesday afternoon, the VLCC New Courage, carrying about 1 million barrels of US-origin Southern Green Canyon crude, was waiting for a berth in Lanshan port of Rizhao city in the eastern Shandong province, according to traders. Sources said Shandong-based independent refiner Yuhuang Petrochemical was the buyer of the cargo, which was traded against ICE Brent on a CFR Shandong basis, and Unipec was the original charterer of the ship. New Courage departed the US Gulf Coast in late September and loaded a second time at Aruba in the Mediterranean in early October, according to S&P Global Platts vessel tracking software cFlow. It discharged part of its cargo at Zhoushan port in eastern Zhejiang province before heading to Lanshan.

(’000 mt)

Russia Saudi Arabia Iraq Angola Brazil Oman Kuwait UAE UK Iran
Russia
Saudi Arabia
Iraq
Angola
Brazil
Oman
Kuwait
UAE
UK
Iran

The SGC oil grade, with an API of around 28 and sulfur

content of around 2.3%, was a suitable feedstock for

independent refineries, a trader said. The shipment is

unique because independent refineries generally avoid US

crudes due to political risks.

On the other hand, Sinopec has been keen on US

  • 2017 crude oil.

  • 2019 In September, Unipec President Chen Bo cited plans

to expand US crude trading in the long-term and raise its

shipments to China to 500,000 b/d in coming years from

300,000 b/d in 2018.

Unipec has also leased 10 million barrels of crude

storage in the US Virgin Islands, with a deepwater

  • 012345678 terminal for VLCCs, to support its long-term US crude

Source: General Administration of Customs

Oil edges higher, remains in holding pattern

ahead of OPeC meeting ...

from

page 1

decision to leave the bloc on Monday. UAE energy minister Suhail al-Mazrouei said Tuesday that the group will continue its market management agreement with Russia and other oil producing allies regardless of Qatar’s exit from the group. “What is important is that the Declaration of Cooperation will stay,” Mazrouei told reporters. “Everyone is excited to continue the journey because once they joined us they discovered that we are for balancing the market for the benefit of consumers and producers and I think it is encouraging more countries to join us.” OPEC is scheduled to meet on December 6-7 and is widely expected to agree to cut output to support falling prices. But so far OPEC has only pledged a commitment to make an output decision, offering the market little insight into the size of any potential. S&P Global Platts Analytics forecasts a 1.2 million-1.4 million b/d reduction compared with October’s levels. On Tuesday afternoon US senators Lindsey Graham, Republican-South Carolina, and Bob Corker, Republican- Tennessee, denounced Saudi Crown Prince Mohammed bin Salman, commonly referred to as “MBS,” as complicit in the killing of Saudi journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. “MBS, the crown prince, is a wrecking ball. I think he is complicit in the murder of Mr. Khashoggi to the highest level possible,” Graham told reporters following a meeting with CIA Director Gina Haspel in Washington. “You’d have to be willfully blind not to come to the conclusion that this was orchestrated and organized by people under the command of MBS.” Graham, chairman of the Senate Judiciary Committee, is a key supporter of US President Donald Trump in the Senate. Graham went on to say that the crown prince has undercut US-Saudi relations and that he would not support arms sales to Saudi Arabia as long as he was in power .

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

12

Oilgram Price rePOrt

Prices effective December 4, 2018

Corker, chairman of the Senate Committee on Foreign Relations, also hammered MBS, telling reporters: “I have zero question in my mind that the crown prince MBS ordered the killing, monitored the killing, knew exactly what was happening, planned it in advance. If he was in front of a jury he would be convicted in 30 minutes, guilty.” While the hawkish comments ratcheted up US-Saudi tensions ahead of the OPEC meeting, the senators’ remarks were narrowly focused on the crown prince and arms sales, and the comments failed to meaningfully move energy markets. Products futures fell back from early-session highs, but still finished in the black on Tuesday. NYMEX January ULSD settled 1.34 cents higher at $1.9009/gal and NYMEX January RBOB was up 1.20 cents at $1.4434/gal at market close.

REFiNERy UPdatES

Beaumont, texas

Owner: ExxonMobil Overall capacity (b/d): 362,300 Units affected: Fluid catalytic cracker Unit capacity (b/d): 113,000 duration: Started Monday morning

notes: An attempt to restart the fluid catalytic cracker unit at ExxonMobil’s 362,300 b/d Beaumont, Texas, plant was aborted Monday morning, sources said.

S&P Global Platts previously reported that the 113,000-b/ d gasoline- and diesel-producing unit was shut on October 10 for maintenance and was scheduled to be restarted on December 1. A regional market source said a second restart attempt

is scheduled for December 7. An ExxonMobil spokeswoman did not respond to a request for comment Tuesday.

Source: Market sources

Petronor, Bilbao, spain

Owner: Repsol Overall capacity (b/d): 220,000 Units affected: alkylation unit ak3 Unit capacity: not specified duration: december 4 – december 6

notes: Petronor said in a note on its web site Tuesday that it is halting the alkylation unit AK3 for maintenance.

The return date is Thursday December 6, the company said.

Source: Company

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

13

Oilgram Price rePOrt

Prices effective December 4, 2018

Product Price Assessments

aSia, dEC 4

 

Mid

Change

Singapore (PGA page 2002)

($/barrel)

Naphtha

PAAAP00

55.21–55.25

55.230

+0.270

Jet kerosene

PJABF00

75.32–75.36

75.340

-0.730

Gasoil

POABC00

74.33–74.37

74.350

-0.250

Gasoil 10 ppm

AAOVC00

74.33–74.37

74.350

-0.250

Gasoil 50 ppm

AAPPF00

74.25–74.29

74.270

-0.250

Gasoil 0.05% S

AAFEX00

73.92–73.96

73.940

-0.250

Gasoil 0.25% S

AACUE00

73.09–73.13

73.110

-0.250

Gasoil 50 ppm disc/prem

AAPPH00

-0.65–-0.61

-0.630

-0.090

Mogas 92 unl

PGAEY00

61.01–61.05

61.030

-0.790

Mogas 95 unl

PGAEZ00

62.85–62.89

62.870

-0.840

Mogas 97 unl

PGAMS00

64.43–64.47

64.450

-0.850

CFR Naphtha

AAOVF00

55.010

+0.060

Naphtha pap. (bal month)

AAPLD00

55.03–55.07

55.050

+0.100

Naphtha pap. (Jan)

PAAAQ00

55.38–55.42

55.400

+0.050

Naphtha pap. (Feb)

PAAAR00

55.18–55.22

55.200

-0.100

Kerosene pap. (bal month)

AAPLE00

76.04–76.08

76.060

-0.690

Kerosene pap. (Jan)

PJABS00

76.56–76.60

76.580

-0.640

Kerosene pap. (Feb)

PJABT00

76.82–76.86

76.840

-0.620

Gasoil pap. (bal month)

AAPLF00

74.68–74.72

74.700

-0.230

Gasoil pap. (Jan)

POAFC00

75.30–75.34

75.320

-0.050

Gasoil pap. (Feb)

POAFG00

75.75–75.79

75.770

-0.010

($/mt)

FO 180 CST 2%

PUAXS00

423.72–423.76

423.740

+7.600

HSFO 180 CST

PUADV00

414.40–414.44

414.420

+7.440

180 CST disc/premium

AAGZF00

7.33–7.37

7.350

+1.050

CHiNa, dEC 4 (PGA page 2010) ($/mt) South China FOB

Mid

Change

Unl 90 RON

AAICU00

512.50–516.50

514.500

-6.750

Unl 93 RON

AAICW00

521.00–525.00

523.000

-6.750

South China, C&F

Jet kerosene

PJABQ00

603.25–607.25

605.250

-5.750

Gasoil

POAFA00

559.50–563.50

561.500

-1.000

Hong kong

Fuel oil 180 CST

PUACC00

444.50–445.50

445.000

-1.000

Fuel oil 380 CST

PUAER00

439.50–440.50

440.000

-1.000

FUJaiRaH, FOB, dEC 4 (PGA page 2018)

 

($/barrel)

Mid

Change

Gasoline 95 unleaded

AFUJA00

64.480

-0.580

Kerosene

AFUJF00

74.670

-0.720

Gasoil 10 ppm

AFUJP00

73.370

-0.180

Gasoil

AFUJK00

73.370

-0.180

($/mt)

HSFO 380 CST

AFUJQ00

403.900

+4.450

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

 

Mid

Change

 

Singapore (continued)(PGA pages 2002 & 2655)

 

($/mt)

HSFO 380 CST

 

PPXDK00

410.69–410.73

410.710

+4.310

HSFO 180 CST pap. (bal month) AAPML00

410.43–410.47

410.450

+7.250

HSFO 180 CST pap. (Jan)

 

PUAXZ00

399.93–399.97

399.950

+5.150

HSFO 180 CST pap. (Feb)

 

PUAYF00

394.43–394.47

394.450

+4.900

MTBE

PHALF00

618.00–620.00

619.000

-10.000

C&F Japan (PGA page 2006)

 

($/barrel)

 

Jet kerosene

 

PJAAN00

77.09–77.13

77.110

-0.710

Mogas unl

 

PGACW00

62.89–62.93

62.910

-0.770

($/mt)

Naphtha

 

PAAAD00

512.75–513.75

513.250

0.000

Nph 2nd 1/2 Jan

 

PAAAE00

513.25–513.75

513.500

+2.000

Nph 1st 1/2 Feb

 

PAAAF00

513.25–513.75

513.500

+1.000

Nph 2nd 1/2 Feb

 

PAAAG00

512.75–513.25

513.000

-1.000

HSFO 180 CST

 

PUACJ00

429.74–429.78

429.760

+7.080

FOB Japan

 

($/barrel)

 

Gasoil

POJAP00

84.216

+0.037

C+F australia (PGA page 2004)

 

($/barrel)

 

Mogas 92 unl

 

AACZF00

65.01–65.05

65.030

-0.770

Mogas 95 unl

 

AACZH00

66.85–66.89

66.870

-0.820

Jet kerosene

 

AAFIY00

79.63–79.67

79.650

-0.700

Gasoil 10 ppm

 

AAQUD00

78.90–78.94

78.920

-0.220

aRaB gUlF, FOB, dEC 4 (PGA page 2004)

 

($/mt)

Mid

Change

Naphtha

PAAAA00

475.75–476.75

476.250

-1.060

Naphtha LR2

AAIDA00

474.41–475.41

474.910

-1.010

HSFO 180 CST

PUABE00

397.07–397.11

397.090

+8.090

HSFO 380 CST

AAIDC00

393.36–393.40

393.380

+4.960

($/barrel)

 

95

RON unleaded

AAICY00

60.61–60.65

60.630

-0.840

92

RON unleaded

AAGJA00

58.790

-0.790

Kerosene

PJAAA00

72.78–72.82

72.800

-0.800

Kerosene LR2

AAKNZ00

72.58–72.62

72.600

-0.800

Gasoil 10 ppm

AAIDT00

71.64–71.68

71.660

-0.320

Gasoil 0.05% S

AAFEZ00

71.15–71.19

71.170

-0.210

Gasoil 0.25% S

AACUA00

70.04–70.08

70.060

-0.320

Gasoil

POAAT00

71.64–71.68

71.660

-0.320

Gasoil LR2

AAKBT00

71.43–71.47

71.450

-0.320

iNdONESia, dEC 4 (PGA page 2516)

 

($/barrel)

 

FOB Indonesia

Mid

Change

LSWR mixed/cracked

PPAPU00

70.18–70.22

70.200

+0.980

 

spot prem/disc

 

LSWR mixed/cracked

AAHXR00

10.32–10.36

10.340

+0.040

14

AsiA product premium/discount Assessments

dec 4

Mid

Change

MOP * singapore (PGA page 2002)

 

($/barrel)

 

Jet

PJACU00

-0.91/-0.87

-0.890

-0.070

Gasoil 0.25% S

AACQI00

-1.81/-1.77

-1.790

-0.090

Gasoil

POAIC00

-0.57/-0.53

-0.550

-0.090

CFR Naphtha

AAOVG00

-0.150

-0.030

($/mt)

380

CST

PPXDL00

7.38/7.42

7.400

-2.050

MOP* arab Gulf (PGA page 2004)

 

($/barrel)

 

Jet

PJACV00

0.83/0.87

0.850

0.000

Gasoil 10 ppm

AAIDU00

0.98/1.02

1.000

0.000

Gasoil 0.25% S

AACUC00

-0.62/-0.58

-0.600

0.000

Gasoil

POAID00

0.98/1.02

1.000

0.000

380

CST**

PPXDM00

-3.73/-3.69

-3.710

-3.130

($/mt)

HSFO 180 CST

AAXJA00

18.75/19.25

19.000

-1.500

HSFO 380 CST

AAXJB00

18.75/19.25

19.000

-1.500

MOP* Japan (PGA page 2006)

 

($/barrel)

 

Naphtha

PAADI00

-0.75/-0.25

-0.500

+2.000

MOP* West India (PGA page 2012)

 

($/mt)

Gasoline (92 RON)

AARBQ00

506.440

-6.710

Gasoline (95 RON)

AAQWI00

515.790

-7.050

Naphtha

AAQWK00

492.730

0.000

 

Jet kero

AAQWM00

582.870

-5.760

Gasoil (10 ppm)

AAQWO00

554.230

-1.900

Gasoil (500 ppm)

AAQWQ00

538.530

-1.870

Gasoil (2500 ppm)

AAQWS00

532.350

-1.860

($/barrel)

 

Gasoline (92 RON)

AARBP00

59.580

-0.790

Gasoline (95 RON)

AAQWH00

61.400

-0.840

Naphtha

AAQWJ00

54.750

0.000

 

Jet kero

AAQWL00

73.780

-0.730

Gasoil (10 ppm)

AAQWN00

72.730

-0.250

Gasoil (500 ppm)

AAQWP00

72.290

-0.250

Gasoil (2500 ppm)

AAQWR00

71.460

-0.250

*Mean of Platts. **=Differential to FOB Arab Gulf HSFO 180 CST.

 

PlattS iNdEx, dEC 4 (PGA page 115)

 

Change

Platts Jet Fuel Index

PJGLO00

212.06

+0.900

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.

Oilgram Price rePOrt

Prices effective December 4, 2018

Product Price Assessments

EUROPEaN BUlk, dEC 4

($/mt)

Mid

Change

Mid

Change

(PGA page 1114)

 

Cargoes FOB Med basis italy

Cargoes CiF Med basis genoa/lavera

 

Prem unl 10 ppm

AAWZA00

519.25–519.75

519.500

+8.000

AAWZB00

530.75–531.25

531.000

+8.500

Naphtha physical

PAAAI00

455.75–456.25

456.000

+4.750

PAAAH00

471.25–471.75

471.500

+5.500

Jet av. fuel

AAIDL00

601.25–601.75

601.500

+7.750

AAZBN00

621.50–622.00

621.750

+8.750

ULSD 10 ppm

AAWYY00

571.25–571.75

571.500

+8.500

AAWYZ00

585.50–586.00

585.750

+9.000

Gasoil 0.1%

AAVJI00

564.75–565.25

565.000

+7.000

AAVJJ00

582.00–582.50

582.250

+7.500

1% fuel oil

PUAAK00

382.50–383.00

382.750

+5.500

PUAAJ00

395.75–396.25

396.000

+6.250

3.5% fuel oil

PUAAZ00

365.25–365.75

365.500

+7.250

PUAAY00

379.00–379.50

379.250

+8.000

(PGA page 1110)

 

Cargoes FOB NwE

Cargoes CiF NwE basis aRa

Gasoline 10 ppm

AAXFQ00

532.25–532.75

532.500

+13.000

Naphtha swaps

PAAAJ00

487.50–488.00

487.750

+5.500

Naphtha physical

PAAAL00

482.00–482.50

482.250

+6.000

Jet kerosene

PJAAV00

609.00–609.50

609.250

+8.750

PJAAU00

623.00–623.50

623.250

+8.750

ULSD 10 ppm

AAVBF00

569.00–569.50

569.250

+7.000

AAVBG00

584.00–584.50

584.250

+7.000

Diesel 10 ppm NWE

AAWZD00

571.25–571.75

571.500

+7.000

AAWZC00

586.75–587.25

587.000

+7.000

Diesel 10 ppm UK

AAVBH00

588.25–588.75

588.500

+7.000

Gasoil 0.1%

AAYWR00

557.75–558.25

558.000

+9.000

AAYWS00

579.50–580.00

579.750

+9.000

1% fuel oil

PUAAM00

372.75–373.25

373.000

+5.250

PUAAL00

386.75–387.25

387.000

+5.500

3.5% fuel oil

PUABB00

350.25–350.75

350.500

+8.250

PUABA00

369.00–369.50

369.250

+8.500

(PGA pages 1112 & 1380)

 

Barges FOB Rotterdam

98 RON unl

AAKOD00

582.00–582.50

582.250

+7.000

Prem unl

PGABM00

519.75–520.25

520.000

+2.000

Reformate

AAXPM00

534.250

+7.000

Eurobob

AAQZV00

507.00–507.50

507.250

+7.000

Naphtha physical

PAAAM00

478.00–478.50

478.250

+6.000

Jet kerosene

PJABA00

618.00–618.50

618.250

+4.500

Diesel 10 ppm*

AAJUS00

591.75–592.25

592.000

+8.750

Gasoil 50 ppm

AAUQC00

589.50–590.00

589.750

+15.750

Gasoil 0.1%*

AAYWT00

575.75–576.25

576.000

+13.000

1% fuel oil

PUAAP00

374.75–375.25

375.000

+8.500

3.5% fuel oil

PUABC00

374.75–375.25

375.000

+8.500

3.5% 500 CST fuel oil

PUAGN00

371.00–371.50

371.250

+8.500

380 CST

PUAYW00

379.50–380.50

380.000

+12.000

*FOB Amsterdam-Rotterdam-Antwerp

 

wESt aFRiCa PROdUCtS ($/mt), dEC 4

 

Mid

Change

west africa cargoes (PGA page 1122)

 
 

FOB NwE

Gasoline

AAKUV00

533.750

+6.500

 

CiF west africa

Gasoline

AGNWC00

562.250

+7.250

 

FOB StS west africa

Gasoil 0.3%

AGNWD00

602.500

+10.000

© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved.

15

Platts euRO denOMInated PROduCt assessMents

dec 4 Cargoes CIF nWe/basis aRa (€/mt) (PGA page 1116)

Mid

Change

Nap phy

AAQCE00

424.52–424.96

424.740

+5.321

Jet

AAQCF00

548.71–549.15

548.925

+7.754

Cargoes FOB nWe (PGA page 1116)

 

1%

AAQCG00

328.30–328.74

328.519

+4.653

Barges FOB Rotterdam (€/mt) (PGA page 1118)

 

Prem unl

AAQCH00

457.77–458.21

457.988

+1.801

10 ppm*

AAQCI00

521.18–521.62

521.402

+7.752

Gasoil 0.1%*

AAYWY00

507.09–507.53

507.310

+11.493

3.50%

AAQCK00

330.06–330.50

330.280

+7.515

3.50% 500 CST

PUAGO00

326.76–327.20

326.977

+7.514

Mid Conventional cargoes nY harbor (€¢/gal) (PGA pages 1350 & 1450)

Change

Unleaded 87

AAPYV00

131.65–131.73

131.689

+0.179

Unleaded 89

AAPYW00

135.63–135.71

135.670

-0.508

Unleaded 93

AAPYX00

141.60–141.69

141.642

-1.537

Cargoes CIF West africa (€/mt) (PGA page 1116)

 

Gasoline

AANWC00

495.200

+6.429

Cargoes FOB nWe West africa (€/mt) (PGA page 1116)

 

Gasoline

AGNWA00

470.099

+5.766

Cargoes FOB sts West africa (€/mt) (PGA page 1116)

 

Gasoil 0.3%

AGNWE00

530.650

+8.853

Euro/US$ forex rate: 1.1354. 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.

EUROPEaN FEEdStOCkS aNd BlENdStOCkS

Change

CiF Northwest Europe cargo ($/mt) (PGF page 1760)

VGO 0.5-0.6%

AAHMZ00

445.25–446.25

445.750

+4.000

VGO 2%

AAHND00

444.75–445.75

445.250

+4.250

FOB Northwest Europe cargo ($/mt)

 

VGO 0.5-0.6%

AAHMX00

426.25–427.25

426.750

+3.500

VGO 2%

AAHNB00

426.00–427.00

426.500

+3.750

Straight Run 0.5-0.7%

PKABA00

405.75–406.75

406.250

+6.250

FOB Black Sea cargo ($/mt)

 

VGO 0.8%

ABBAD00

430.250

+2.750

VGO 2%

ABBAC00

430.000

+3.250

CiF Mediterranean cargo ($/mt)

 

Straight Run 0.5-0.7%

AAJNT00

440.500

+6.250

VGO 0.8%

ABBAB00

446.000

+3.750

VGO 2%

ABBAA00

445.750

+4.250

FOB Rotterdam barge ($/mt)

 

MTBE*

PHALA00

658.75–659.25

659.000

+9.250

VGO 0.5-0.6%

AAHNF00

426.25–427.25

426.750

+3.500

VGO 2%

AAHNI00

426.00–427.00

426.500

+3.750

* FOB Amsterdam-Rotterdam-Antwerp

Oilgram Price rePOrt

Prices effective December 4, 2018

Product Price Assessments new York/Boston, dec 4 (PGA page 152)

 

Mid

Change

Mid

Change

Mid

Change

New york

 

Cargo (¢/gal)

RVP

Barge (¢/gal)

RVP

differentials to NyMEx

Unl 87

AAMHG00

148.24–148.34

148.290

+0.700

AAMHGRV

15.0 AAMIT00

153.24–153.34

153.290

+0.700

AAMITRV 15.0

 

Unl 89

AAMIW00

152.96–153.06

153.010

+0.900

AAMIWRV

15.0 AAMHJ00

157.96–158.06

158.010

+0.900

AAMHJRV 15.0

 

Unl 93

AAMIZ00

160.04–160.14

160.090

+1.200

AAMIZRV

15.0 AAMHM00

165.04–165.14

165.090

+1.200

AAMHMRV 15.0

 

CBOB

AAWBK00

147.49–147.59

147.540

+0.700

AAWBKRV

15.0 AAWBL00

145.99–146.09

146.040

+0.700

AAWBLRV 15.0

AANYX14

1.700

-0.500

Prem CBOB

AAWLD00

162.19–162.29

162.240

+1.200

AAWLDRV

15.0 AAWLC00

160.69–160.79

160.740

+1.200

AAWLCRV 15.0

 

Unl RBOB

AAVKS00

147.49–147.59

147.540

+0.700

AAVKSRV

15.0 AAMGV00

145.99–146.09

146.040

+0.700

AAMGVRV 15.0

AANYX15

1.700

-0.500

Prem RBOB

AAVKT00

162.19–162.29

162.240

+1.200

AAVKTRV

15.0 AAMGY00

160.69–160.79

160.740

+1.200

AAMGYRV 15.0

 

Jet fuel

PJAAW00

190.54–190.64

190.590

+1.840

ADIGA00

0.500

+0.500

LS jet kero

PJABJ00

197.79–197.89

197.840

+1.340

ULS kero

AAVTI00

203.54–203.64

203.590

+1.340

No. 2

POAEG00

180.79–180.89

180.840

+1.340

ADIAO00

-9.250

0.000

ULSD

AATGX00

190.19–190.29

190.240

+1.340

ADIZA00

0.150

0.000

LS heating oil

AAXPY00

187.440

+1.340

ADIAP00

-2.650

0.000

ULS heating oil

AAXPX00

188.590

+1.340

ADIAQ00

-1.500

0.000

 

Cargo ex-duty (¢/gal)*

RVP<

Unl 87

AASAA00

144.19–144.29

144.240

<