Oil prices edged higher on Tuesday as better-than-expected U.S. manufacturing activity data spurred hope for a post-pandemic economic recovery.
Brent crude rose 30 cents to settle at $45.58 a barrel, while WTI rose 15 cents to $42.76 per barrel.
US Gulf of Mexico offshore oil output on Tuesday was down by 525 KB/D, or 28.4% of the region’s daily production, the US Department of Interior reported, with 71 of the 643 manned platforms remained evacuated, down from 117 production platforms on Monday.
OPEC oil output has risen by about 1 MB/D in Aug’20 to total 24.27 MB/D on average, up 950 KB/D from Jul’20, a Reuters survey found, as the group and allies eased record oil supply curbs as the global economy and demand began to recover from the coronavirus pandemic.
U.S. manufacturing activity accelerated to a more than 1-1/2-year high in August amid a surge in new orders, but employment continued to lag, supporting views that the labor market recovery was losing momentum. The Institute for Supply Management (ISM) said its index of national factory activity increased to a reading of 56.0 last month from 54.2 in July. That was the highest level since January 2019 and marked three straight months of growth.
The US Trade Representative’s office said on Tuesday it has extended China tariff exclusions for a wide range of goods, including smart watches and certain medical masks, through the end of 2020, rather than renewing the previous one-year extensions.
The Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI) showed China’s factory activity expanded at the fastest pace in nearly a decade last month, bolstered by the first increase in new export orders this year.
Hedge funds continued to rotate their positions from crude to fuels, especially gasoline, in light trading during the summer vacation period, selling the equivalent of 10 million barrels in the six most important petroleum futures and options contracts in the week to 25 Aug’20.
Stocks drew across the board as per API data, a development that may well have been expected in the light of the shutdowns caused by the onset of Hurricane Laura.
At a global level, the death toll from the COVID-19 virus rose to 860,323 (+5,899 DoD) yesterday. The total number of active cases was almost unchanged at 6,841,282. (Click here for details).
Asia’s naphtha crack recovered to a three-session high of $71.65 a tonne on Tuesday, supported by solid demand.
The September crack is higher at $0.80 /bbl.
Asia’s gasoline crack fell on Tuesday to $1.12 a barrel premium to Brent crude as petrol demand recovery was marked by uncertainties because of the resurgence of COVID-19 cases.
The September crack is lower at $2.20 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for 10 ppm gasoil dropped on Tuesday, hurt by persistent weakness in buying interest for physical cargoes in a market grappling with abundant supplies.
Cash differential for 10 ppm gasoil were at a discount of 50 cents a barrel to Singapore quotes, the widest since May 28.
The September/October time spread for 10 ppm gasoil traded at a discount of 54 cents a barrel on Tuesday.
The September crack for 500 ppm Gasoil is steady at $3.40 /bbl with the 10 ppm crack at $ 3.90 / bbl. The regrade is at -$ 5.60 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month 380-cst HSFO refining margin against Dubai crude fell to a two-week low on Tuesday amid receding demand for cargoes of the fuel, as well as slowing power generation demand in the Middle East.
The October 380-cst HSFO crack slipped to a $2.97 a barrel discount during Asia trade, down from $2.87 a barrel on Monday and its lowest since Aug. 17.
The September crack for 180 cst FO is higher at – $1.80 /bbl with the visco spread at $0.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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.
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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.