Crude Oil
Oil prices recovered a bit on Friday after dropping on Thursday due to the drop in US GDP.
Brent crude settled 37 cents higher at $43.31 per barrel, while WTI rose 35 cents to $40.27 a barrel.
OPEC oil output has risen by 970 KB/D MoM in Jul’20 to total 23.32 MB/D as Saudi Arabia and other Gulf members ended their voluntary extra supply curbs on top of an OPEC-led deal, and other members made limited progress on compliance.
The dollar extended its dramatic fall on Friday and was on course for its biggest monthly drop in a decade after news on Thursday that U.S. gross domestic product collapsed at a 32.9% annualized rate – the steepest decline in output since records began in 1947.
Globally, the economic outlook has dimmed again, with increasing coronavirus infections raising the risk of renewed lockdowns and threatening any rebound, according to Reuters polls of more than 500 economists.
The US intensified its economic pressure on China’s Xinjiang province on Friday, imposing sanctions on the Xinjiang Production and Construction Corps (XPCC) for what it said were human rights abuses against Uighurs and other ethnic minorities.
Japan’s factory activity contracted at the slowest pace in 5 months in Jul’20, with the final au Jibun Bank Flash Manufacturing PMI rising to a seasonally adjusted 45.2 in Jul’20 from 40.1 in Jun’20 in a sign that pressures on manufacturers were easing.
China’s factory activity expanded at the fastest pace in nearly a decade in Jul’20, with the Caixin/Markit Manufacturing PMI rising to 52.8 from 51.2 in Jun’20 as domestic demand continued to improve after the coronavirus crisis.
US energy firms cut 1 oil rig in the week to 31 Jul’20 to total 180 (-590 YoY), according to Baker Hughes. Analysts said higher oil prices will encourage energy firms to slow rig count reductions and possibly start adding some units later this year.
Money managers cut their net long US crude futures and options positions by 14,644 contracts to total 360,547 in the week to 28 Jul’20, the US CFTC said on Friday.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 692,420 (+4,404 DoD) yesterday, with the total number of confirmed infections at 18,226,600 (+217,901 DoD). (Click here for details).
Naphtha
No fresh news on the naphtha markets.
The August crack is lower at $ -1.50 /bbl
Gasoline
Asia’s gasoline crack dived 93% on Thursday to hit a near two-month low of 4 cents a barrel premium over Brent crude as demand recovery took a hit from surging coronavirus infections globally, while supply remained high.
The August crack has flipped to negative territory at – $0.05 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s jet fuel cash differentials slumped to their biggest discounts in nearly a month on Thursday. Cash discounts for jet fuel were at 45 cents a barrel to Singapore quotes on Thursday, the widest since July 3. They were at a discount of 40 cents a barrel on Wednesday.
Refining margins or cracks for jet fuel dropped to $1.56 a barrel over Dubai crude during Asian trading hours on Thursday, down 25 cents from a day earlier. The cracks have averaged $1.85 a barrel over Dubai crude so far this month, compared with an average of $2.01 per barrel in June.
Singapore Airlines Ltd warned passenger capacity may remain at less than half of pre-pandemic levels by its March 2021 year-end after slumping to a first-quarter net loss on Wednesday.
The August crack for 500 ppm Gasoil is lower at $5.40 /bbl with the 10 ppm crack at $ 6.20 / bbl. The regrade is at -$ 4.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst HSFO front-month time spread hit a near five-month high of $1.25 per tonne on Thursday, after increased buying interest for cargoes of the fuel that started in early July.
A total of 1.42 million tonnes of HSFO exchanged hands in the Singapore trading window in July, up from 220,000 tonnes in June and 1.28 million tonnes in July last year.
The August crack for 180 cst FO is higher at – $2.25 /bbl with the visco spread at $0.65 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
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.