U.S. oil prices closed at their highest since 2018 on Tuesday ahead of the release of industry data that market bulls hope will show a decent drawdown in gasoline last week to match the hype of a rally driven by expectations more than real numbers of fuel demand.
Brent crude settled up $1.13, or 1.6%, at $73.99 per barrel. Brent earlier rose to a session peak of $74.13, the highest for a day since April 2019.
WTI futures settled up $1.24, or 1.8%, at $72.12 per barrel. It earlier hit a session peak of $72.28. Both that peak and Tuesday’s settlement were the highest since October 2018.
US energy firms added 6 rigs to total 365 (+166 YoY), the highest since Apr’20, according to Baker Hughes, as growth in drilling slows despite crude prices hitting their highest since 2018.
Money managers raised their net long US crude futures and options positions by 27,949 contracts to total 424,476 in the week to 8 Jun’21, the US CFTC said on Friday.
api data
While the API data showed a huge stock draw for crude inventories, it also showed significant builds in product stocks. This build does not augur well for estimated product demand which, up to now, has been far less than expected. Official data is awaited tomorrow.
At a global level, the death toll from the COVID-19 virus rose to 3.84 Million (+9,149 DoD) yesterday. The total number of active cases rose fell by around 100,000 DoD to 11.73 million. (Click here for details).
Product Data (except for cracks) not updated since Monday
Asia’s naphtha crack climbed on Friday, recouping most losses incurred a day earlier, amid concerns of tight arbitrage supplies from Europe in June coupled with expectations for firmer Asian demand.
The naphtha crack jumped to $104.53 a tonne from $100.25 a tonne in the previous session.
The July crack is lower at -$0.80 / bbl
Product Data (except for cracks) not updated since Monday
Asia’s gasoline crack was little changed at $5.70 a barrel, down 2 cents from the previous session but higher than the $5.18 a barrel at the start of the week.
The gasoline market has been supported by expectations of a rebound in demand in Europe and the United States and hopes for demand recovery in Asia, as countries slowly begin to ease restrictions following a recent wave of COVID-19 infections.
ARA gasoline stocks were also at a three-week low in the week to June 10 at 1.13 million tonnes, down 4% from the previous week and 20% lower from last year, the data showed.
The July crack is lower at 7.50 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Product Data (except for cracks) not updated since Monday
Asian refining margins for 10 ppm gasoil rose for a second consecutive session on Friday as seasonal refinery turnarounds have tightened supplies, although regional demand continues to remain lacklustre due to COVID-19 restrictions.
Cash discounts for gasoil with 10 ppm sulphur content widened by a cent to 11 cents per barrel to Singapore quotes on Friday.
Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub dropped 7.4% to 2.1 million tonnes in the week ended June 10, data from Dutch consultancy Insights Global showed.
Cash discounts for jet fuel narrowed by 6 cents to 35 cents per barrel to Singapore quotes on Friday.
The Asian aviation sector is seeing further headwinds with regional carriers cutting capacity in Jun’21, to 37.3% below 2019 levels, as demand evaporates due to rising coronavirus infections, OAG said 10 Jun’21.
The July crack for 500 ppm Gasoil is lower at $6.35 /bbl with the 10 ppm crack at $ 8.55 /bbl. The regrade is at -$ 0.40 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Product Data (except for cracks) not updated since Monday
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) front month time spread flipped back to a narrow backwardation, while the crack to Dubai crude snapped five straight sessions of declines, Refinitiv data in Eikon showed, on prospects of tightening supplies.
The tighter supply outlook comes as China’s independent refineries are snapping up fuel oil, resuming imports after a nearly five-year hiatus, as Beijing’s crackdown on crude oil quota trading along with new fuel taxes limit refinery feedstock options.
Five companies, including four refineries based in the Shandong province and one local trader, booked 5.2 million barrels of fuel oil from Russia and the Middle East in recent few weeks for deliveries from late June through July, four traders and two refinery officials familiar with the transactions told Reuters.
“(This) should have a trickle down effect on 0.5% (VLSFO prices) in Singapore as the majority of these grades were going to the VLSFO bunker blend pool,” said a fuel oil trader.
Fuel oil stocks in the ARA refining and storage fell by 63,000 tonnes to a two-week low of 1.31 million tonnes in the week ended June 10, data from Dutch consultancy Insights Global (IG) showed.
The June crack for 180 cst FO is higher at -$5.60 /bbl with the visco spread at $1.25 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No fresh action 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.