Crude Oil
Oil prices rose on Tuesday as optimism about production cuts battled fears about resurgence of coronavirus cases.
Brent futures rose 38 cents to settle at $41.18 a barrel. WTI crude rose 75 cents to settle at $38.94 a barrel.
Supportive for the market, Libya said it declared force majeure on some exports from its Sharara oilfield on Tuesday, after production was briefly halted by an armed group just days after output had resumed following a blockade that had lasted months.
US crude output is set to fall by 670 KB/D in 2020 to 11.56 MB/D, the US EIA said on Tuesday, steeper than the 540 KB/D decline it forecast previously as drillers have slashed activity.
The EIA now expects US petroleum and other liquid fuel consumption to plunge 2.4 MB/D to 18.06 MB/D in 2020 compared with its previous forecast for a drop of 2.19 MB/D, while estimating 2020 world consumption to plummet 8.3 MB/D to 92.53 MB/D.
api data
US inventories continued to grow, notwithstanding a small drop in gasoline stocks. Markets will keenly await the EIA report today.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 413,003 (+4,763 DoD) yesterday, with the total number of confirmed infections at 7,316,944 (+121,751 DoD). (Click here for details).
Naphtha
No fresh news on the naphtha markets
The July crack is lower at -$1.90 / bbl.
Gasoline
Asia’s gasoline crack rose to a fresh three-month high of $2.37 a barrel to Brent on Tuesday on hopes of a swift demand recovery.
A third of U.S. offshore oil and gas production in the Gulf of Mexico has shut ahead of Tropical Storm Cristobal as refiners braced for the potential impact from its landfall. Asia’s naphtha crack was at a one-week low of $48.40 a tonne.
The July crack is higher at $3.15 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil rose to 30 cents a barrel to Singapore quotes on Tuesday, compared with 15 cents on Monday.
Cash discounts for jet fuel narrowed by two cents to 25 cents a barrel to Singapore quotes on Tuesday.
Global airline revenue is forecast to drop to $419 billion for the year, marking a 50% nosedive from 2019 revenue after coronavirus-induced lockdowns destroyed passenger demand, the IATA announced in a press release on 9 Jun’20.
The July crack for 500 ppm Gasoil is higher at $4.70 /bbl with the 10 ppm crack at $ 5.55 / bbl. The regrade is at -$ 2.45 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO front-month July/August time spread climbed to a near one-month high on Tuesday, even as trade activity remained subdued.
Over the nearer term, however, the prompt-month June/July time spread slipped to a three-session low, weighed by a persistent supply overhang that has seen inventories at key storage hubs, including Singapore, swell.
The July crack for 180 cst FO is higher at – $0.90 /bbl with the visco spread at $1.25 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action for today.
Hedge recommendations are essentially made for refiners. These are not trading positions as such. The rationale of these positions is to lock in extraordinary levels for the refinery.
Click Here to see how all our recommendations have fared
About this blog
This blog post attempts to give a top level summary of the Singapore market goings on to a person who seeks to obtain a directional sense of the market on a daily basis.