Crude Oil
Oil futures steadied on Monday as rising U.S.-China tensions weighed on sentiment, but prices drew support from reports that OPEC and Russia were close to a deal extending output cuts.
Brent futures rose 48 cents to settle at $38.32 a barrel. U.S. crude fell 5 cents to settle at $35.44 a barrel.
Prices found support after news that the OPEC+ group, were moving closer to a compromise on extending oil output cuts and were discussing rolling over the curbs one to two months.
Investors have turned more cautious, however, after China warned of retaliation on U.S. moves over Hong Kong. Economic concerns and questions about fuel demand recovery also weighed on oil futures.
US manufacturing activity eased off an 11-year low in May’20, with the ISM Manufacturing PMI rising to 43.1 from 41.5 in Apr’20, the strongest sign yet that the worst of the economic downturn was behind as businesses reopen.
Euro zone manufacturers also appear to have passed their nadir, with the IHS Markit Manufacturing PMI rising to 39.4 from 33.4 in Apr’20, but activity is still contracting sharply as government-imposed lockdowns due to the coronavirus pandemic keep demand in check.
The US President said on Monday he was deploying thousands of heavily armed soldiers and law enforcement to halt violence in the US capital and vowed to do the same in other cities if mayors and governors fail to regain control of the streets.
Hedge funds and other money managers purchased the equivalent of 26 MB of futures and options in the week ending 26 May’20. Portfolio managers have been buyers in 8 of the last 9 weeks, purchasing a total of 318 MB, having previously sold 688 MB since the start of the year.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 373,697 (+3,191 DoD) yesterday, with the total number of confirmed infections at 6,259,249 (+108,767 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack was at $41.13 a tonne, marginally up from Friday. European exports of naphtha to Asia have fallen after a sharp rise in late March and April, as demand from the regional petrochemical sector held firm and refineries have cut output.
The June crack is steady at -$2.20 / bbl.
Gasoline
Asia’s gasoline crack was at a discount of $1.35 a barrel to Brent versus a discount of 49 cents on Friday.
India’s gasoline and gasoil sales in jumped sharply in May’20 MoM but industry analysts expect a full-scale recovery to be months away as the monsoon season approaches while manufacturing activities remain low and transportation demand takes a hit in some parts of the country.
The June crack is lower at -$1.25 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash discounts for jet fuel narrowed on Monday to their lowest level in over two months, helped by firmer buying interest in the physical market.
Cash discounts for jet fuel narrowed to 52 cents a barrel to Singapore quotes on Monday, a level not seen since March 18. They were at a discount of 77 cents per barrel on Friday.
Global flying capacity for the week ahead rose by 5.7 million seats, or 267,000 extra flights, to 36.7 million seats, as nearly 60 airlines relaunched services this week, but flying seat capacity is still 66% lower YoY, according to air travel data provider OAG.
Cash discounts for 10 ppm gasoil were at 36 cents per barrel to Singapore quotes, as against a 41-cent discount on Friday.
The June crack for 500 ppm Gasoil is lower at $1.25 /bbl with the 10 ppm crack at $ 3.75 / bbl. The regrade is at -$ 1.70 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst HSFO barge crack narrowed its discount to Brent crude to minus $6.78 a barrel on Monday from minus $7.12 a barrel on Friday and was near a 10-month high of minus $6.44 hit on May 19.
The June crack for 180 cst FO is higher at – $3.30 /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.