Crude Oil
Oil prices dropped on Monday as global demand remained below pre-COVID levels while U.S. production edged up.
Brent crude fell 53 cents to settle at $45.28 a barrel, while WTI fell 36 cents to $42.61 per barrel.
Brent still closed out August up 7.5% for a fifth successive monthly price rise. WTI logged a fourth monthly gain at 5.8% after hitting a five-month high of $43.78 a barrel on Aug. 26 when Hurricane Laura struck.
U.S. oil production climbed 420 kbpd in June to 10.44 million barrels a day, the U.S. Energy Information Administration said, putting further pressure on prices.
The U.S. Department of Energy said the West Hackberry Strategic Petroleum Reserve site in Louisiana “sustained considerable damage” from Hurricane Laura.
Abu Dhabi National Oil Company told its customers on Monday it will reduce October supplies by 30%, up from a 5% cut in September, as directed by the United Arab Emirates government to meet its commitment to the recent OPEC+ agreement.
China’s crude imports in September are set to fall for the first time in five months as record volumes of crude are stored in and outside of the world’s largest importer.
China’s factory activity expanded at a slightly slower pace in August, dragged lower by disruptions from floods and adding to risks for the world’s second-largest economy as it emerges from the coronavirus shock. The official manufacturing Purchasing Manager’s Index (PMI) fell slightly to 51 in August from 51.1 in July, but remained above the 50-point mark that separates growth from contraction on a monthly basis.
India’s economy shrank by 23.9% QoQ in Apr-Jun’20, much more than forecast and pointing to a longer than previously expected recovery with analysts some private economists seeing a contraction of up to 10% in the 2020/21 fiscal year.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 850,203 (+4,221 DoD) yesterday. The total number of active cases rose by around 8,000 to 6,841,081. (Click here for details).
Naphtha
Asia’s naphtha intermonth spread returned to backwardation for the first time in about 3-1/2 weeks on Monday, supported by recent demand and stronger gasoline margins.
Front-month first-half October open-specification naphtha price was $1.75 a tonne higher than the following month, reflecting stronger fundamentals.
The September crack is lower at $0.40 /bbl.
Gasoline
Asia’s gasoline margin recovered to a two-session high of $2.18 a barrel after a dip on Friday. Asian gasoline exports for August were seen at 3.8 million to 4.3 million tonnes, down from July’s volume of about 4.7 million tonnes.
The September crack is lower at $2.45 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel were at $1.17 a barrel to Singapore quotes on Monday, compared with a discount of $1.13 a barrel on Friday.
Asian refining margins for jet fuel dropped on Monday to their weakest level in more than 3-1/2 months as airlines continue to struggle with muted passenger demand. Refining margins for jet fuel were at a discount of $1.92 a barrel to Dubai crude during Asian trading hours, the lowest since May 14. They were at minus $1.75 a barrel on Friday.
The September crack for 500 ppm Gasoil is lower at $3.35 /bbl with the 10 ppm crack at $ 3.85 / bbl. The regrade is at -$ 5.40 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Differentials for 0.5% very low-sulphur fuel oil (VLSFO) delivered bunker fuels in Singapore narrowed their discount to benchmark gasoil prices throughout August as marine fuel demand rebounded from its lows in the second quarter of the year.
The September crack for 180 cst FO is lower at – $2.10 /bbl with the visco spread at $0.85 /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.