Oil prices steadied on Thursday following two straight days of gains that took oil futures to highs not seen in a year, after weekly U.S. crude stocks fell sharply while fuel inventories rose more than expected.
Brent crude settled at $71.31 a barrel, down 4 cents after touching its highest since May 2019 earlier in the session. U.S. crude settled at $68.81 a barrel, losing 2 cents.
WTI prices rose as high as $69.40, the strongest since October 2018, after gaining 1.5% in the previous session.
Saudi Arabia has raised the Jul’21 OSPs of most crude grades it sells to Asia. It set the Jul’21 OSP for the flagship Arab light crude at +$1.90/bbl over the Oman/Dubai average for Asia, up 20c/bbl from Jun’21.
DOE DATA
US crude inventories fell, in line with a surprise drop in production and increase in run rates accompanied by a drop in imports. Our material balance statement suggests that the fall may have been exaggerated.
Product inventories rose as product demands seem to have dropped for the last week, once again a bit of a surprise. This is inspite of gasoline production having reduced notwithstanding the increase in run rates, another anomaly which is a bit puzzling. The rise in distillate inventories also seems to be a bit understated.
We think that the demand case may well have been overstated in the past couple of weeks and would advise speculators to be extremely cautious if trading from the long side.
At a global level, the death toll from the COVID-19 virus rose to 3.72 Million (+10,734 DoD) yesterday. The total number of active cases rose fell by around 100,000 DoD to 13.36 million. (Click here for details).
Asia’s naphtha crack extended gains on Thursday, climbing to $104.30 a tonne from $103.98 on the previous day.
The June crack is unchanged at $ 0.20 /bbl
Asia’s gasoline crack snapped four straight sessions of declines to reach a four-session high of $4.89 a barrel above Brent crude, a rise of 24 cents over the previous trading day.
Singapore’s light distillate inventories rose 9% to 13.9 million barrels in the week to June 2, according to Enterprise Singapore data.
The June crack is higher at $6.80 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for 10 ppm firmed on Thursday, after Singapore middle distillate inventories plunged to their lowest level in nearly 15 months.
Cash differentials for gasoil with 10 ppm sulphur content narrowed to 6 cents per barrel to Singapore quotes, compared with a 12-cent discount a day earlier.
Cash discounts for jet fuel widened by 5 cents to 25 cents per barrel to Singapore quotes on Wednesday.
Global scheduled flight capacity rose 6.4% this week, but they still remained 40.4% lower compared with the corresponding week in pre-pandemic 2019, according to aviation data firm OAG. Global capacity in May was 279.9 million seats, 4.9% higher than 266.8 million seats in April, but 43% lower than 488.2 million seats in May 2019, the data firm said.
Singapore’s middle distillate inventories dropped 7.9% to 11.5 million barrels in the week to June 2, a level not seen since March last year, according to Enterprise Singapore data.
The June crack for 500 ppm Gasoil is higher at $6.15 /bbl with the 10 ppm crack at $ 7.95 /bbl. The regrade is at -$ 1.05 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash discount narrowed on Thursday despite a lack of deal activity in the Singapore trading window, trailing a narrowing contango structure in the prompt-month time spreads.
The VLSFO cash discount narrowed to $1.06 a tonne to Singapore, its lowest discount in a month.
The prompt-month VLSFO time spread also jumped to minus 50 cents a tonne, up from minus $2 a tonne on Wednesday, Refinitiv data in Eikon showed.
By contrast, a more active high-sulphur fuel oil (HSFO) trading window saw 380-cst cash discounts drop to minus $2.80 a tonne amid a sluggish demand outlook.
Onshore fuel oil stocks in Singapore rose by 2.72 million barrels, or about 428,000 tonnes, to a three-week high of 25.59 million barrels, or 4.03 million tonnes, Enterprise Singapore data showed.
The June crack for 180 cst FO is higher at -$5.75 /bbl with the visco spread at $1.05 /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.