Crude Oil
Oil prices slipped on Tuesday as investors worried that rising COVID-19 cases would hurt demand while supply could rise with a potential resurgence of Libyan oil production.
Brent crude eased 56 cents to settle at $41.15 a barrel. U.S. crude fell 43 cents to settle at $39.27 a barrel.
Libya is trying to resume exports, which have been almost entirely blocked since January due to civil war. The state’s oil company hopes talks will end a blockade by eastern-based forces.
OPEC and Russia will likely ease oil production cuts from Aug’20 as global oil demand recovers and prices have bounced back from their lows, four OPEC+ sources told Reuters. Key OPEC+ ministers will meet in mid-Jul’20 at the JMMC.
Japan’s factory activity shrank for a 14th straight month in Jun’20, with the au Jibun Bank Manufacturing PMI shrinking to a preliminary 37.8, on sharp reductions in output and new orders, pointing to a heavy hit to demand from the pandemic.
China’s factory activity grew at a faster clip in Jun’20, with the Caixin/Markit Manufacturing PMI rising to 51.2 (+0.5 MoM), after the government lifted coronavirus lockdown measures, but the health crisis continues to weigh on exports and jobs.
South Korean exports slumped more than expected in Jun’20, with outbound shipments falling 10.9% YoY, trade ministry data showed on Wednesday, extending the double-digit contraction into a 3rd month.
api data
Prices pared losses in post-settlement trade after data from trade group the API showed a larger-than-expected draw in U.S. crude stockpiles. However, distillate build was larger than expected.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 513,186 (+5,072 DoD) yesterday, with the total number of confirmed infections at 10,577,756 (+174,264 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack recovered to a two-session high of $78 a tonne as firm demand and tighter supplies overshadowed fears of rising coronavirus in pockets of the world such as China and the United States.
The July crack has jumped to $ 0.50 / bbl today.
Gasoline
Asia’s gasoline crack similarly rebounded from a 3-1/2 week low to a two-session high of $1.95 a barrel premium over Brent. The crack value had dived about 71% in the previous session to 57 cents premium.
The July crack is higher at $2.80 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10-ppm gasoil rose to 88 cents a barrel to Singapore quotes on Tuesday, up from 67 cents per barrel a day earlier.
Cash discounts for jet fuel were at 67 cents a barrel to Singapore quotes on Tuesday, compared with a 79-cent discount on Monday.
The July crack for 500 ppm Gasoil is higher at $5.60 /bbl with the 10 ppm crack at $ 6.45 / bbl. The regrade is at -$ 4.35 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Singapore Asia’s cash differential for cargoes of 0.5% VLSFO jumped to a three-and-a-half-month high on Tuesday, buoyed by a cargo trade in the Singapore pricing window at a firm deal value. The VLSFO cash discount narrowed to minus $3.14 per tonne, its highest since mid-March and up from minus $4.86 a tonne on Monday.
VLSFO cargo deals have almost disappeared this month with just two deals totalling 40 KT of the fuel being dealt in the window this month, compared to 100 KT tonnes in May and 380 KT in April.
By contrast a total of 220 KT of HSFO cargoes were traded, equal to the volumes traded in May but lower from the 320 KT traded in April.
Weak bunker demand due to slowing global trade has weighed on VLSFO demand, while demand for HSFO was supported by rising power generation and refiner feedstock demand.
The July crack for 180 cst FO is lower at – $3.45 /bbl with the visco spread at $1.15 /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.