Crude Oil
Crude oil prices rose to a five-month high on Tuesday as U.S. producers shut most offshore output in the Gulf of Mexico ahead of Hurricane Laura even as rising coronavirus cases in Asia and Europe capped gains.
Brent crude rose 73 cents to settle at $45.86 a barrel, while WTI rose 73 cents to $43.35 per barrel.
That was the highest closes for both benchmarks since March 5.
U.S. producers cut crude output ahead of Hurricane Laura at a rate approaching the level of 2005’s Hurricane Katrina and also halted most oil refining along the Texas/Louisiana coast. Laura is expected to strengthen into a major hurricane with 115 mile per hour (185 kph) winds before it strikes the coast near the Texas-Louisiana border early Thursday, according to the U.S. National Hurricane Center. On Tuesday, producers had evacuated 310 offshore facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production, near the 90% outage that Katrina brought 15 years ago.
Saudi Arabia’s crude oil exports to China fell in Jul’20 to 1.26 MB/D, taking it out of the top two supplier slots for the first time in two years, after a historic production cut to cope with a plunge in fuel demand and prices.
Indian refiners processed 4.18 MB/D of oil in Jul’20, -2.5% MoM, the first monthly fall since Apr’20, as renewed restrictions due to rising coronavirus cases stalled a recovery in fuel sales in the world’s third largest domestic market.
api data
The data released by the API looks quite bullish, but keeping in mind the anticipated impact of Hurricane Laura it may just be precautionary and not indicative of a jump in demand.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 822,728 (+6,056 DoD) yesterday. The total number of active cases fell by around 8,000 to 6,627,517. (Click here for details).
Naphtha
Asia’s naphtha crack hit a four-week high of $73.95 a tonne on Tuesday on firm demand, but supplies were still comparatively ample, resulting in spot prices persisting at discount levels.
The September crack is lower at $0.90 /bbl.
Gasoline
Asia’s gasoline crack was seen above $3 a barrel, up nearly 5.7% as supplies tightened in the United States following supply disruption caused by the hurricane season.
The September crack is lower at $3.45 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian cash discounts for 10 ppm gasoil narrowed for a third consecutive session on Tuesday, supported by a slight uptick in buying interest for physical cargoes, while the front-month spread for the industrial fuel trimmed its contango structure.
Cash differentials for 10 ppm gasoil were at a discount of 30 cents a barrel to Singapore quotes on Tuesday, compared with a 37-cent discount a day earlier.
The September/October time spread for the benchmark gasoil grade in Singapore narrowed its contango on Tuesday by 5 cents to trade at a discount of 41 cents per barrel.
Meanwhile, jet fuel cracks remained in a negative territory and weakened to a discount of 54 cents a barrel to Dubai crude on Tuesday, as against minus 37 cents in the previous session.
The September crack for 500 ppm Gasoil is unchanged at $4.45 /bbl with the 10 ppm crack at $ 5.25 / bbl. The regrade is at -$ 4.95 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Tightening regional refiner output helped lift Asia’s refining margin for 0.5% VLSFO on Tuesday despite rising crude oil prices. The front-month VLSFO crack climbed to a three-session high of $7.86 a barrel above Dubai crude.
Reflecting the ample near-term supplies, however, the front-month time spread extended losses to a more than five-week low of minus $3.25 a tonne on Tuesday.
The September crack for 180 cst FO is lower at – $2.00 /bbl with the visco spread at $0.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity 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.