Oil prices settled little changed on Tuesday as demand concerns due to a new surge in coronavirus cases overshadowed U.S. government forecasts for lower production.
Brent crude futures settled at $43.08 a barrel, down 2 cents in the session. U.S. West Texas Intermediate settled down 1 cent at $40.62 a barrel.
Early in the session, the market popped because of the higher forecast demand, and more bullish jobs data. But the market gave up the gains as focus returned to rising coronavirus cases.
The U.S. EIA forecast that global oil demand would recover through the end of 2021, predicting demand of 101.1 million bpd by the fourth quarter of next year. Oil prices also got a boost as equities edged higher after the U.S. Labor Department’s Job Openings and Labor Turnover (JOLTS) survey for May showed the largest-ever monthly gain for hirings.
The U.S. crude market faces some uncertainties from a court decision on Monday ordering the shutdown of the Dakota Access pipeline, the biggest artery transporting crude oil from North Dakota’s Bakken shale basin to the Midwest and Gulf Coast regions, due to environmental concerns. Market sources in the Bakken said the closure of the 570,000-bpd pipeline, while an environmental impact statement is completed, will likely divert some oil flows to transportation by rail.
OPEC slashed its crude output in Jun’20 to a three-decade low of 22.31 MB/D, according to an S&P Global Platts survey, as OPEC+ continued their campaign to tighten the oil market in its emergence from the depths of the coronavirus crisis.
Iran has slashed crude oil production to its lowest level in four decades as storage tanks and vessels are almost completely full. Total onshore crude stocks surged to 54 MB in Apr’20 from 15 MB in Jan’20, and swelled further to 63 MB in Jun’20, according to FGE Energy.
API reported a surprise build in crude stocks even as product stocks drew a little more than expected.
At a global level, the death toll from the COVID-19 virus rose to 545,655 (+5,515 DoD) yesterday, with the total number of confirmed infections at 11,942,065 (+208,034 DoD). (Click here for details).
Florida’s greater Miami area became the latest U.S. coronavirus hot spot to roll back its reopening, ordering restaurant dining closed on Monday as COVID-19 cases surged nationwide by the tens of thousands and the U.S. death toll topped 130,000. Australia’s second largest city, Melbourne, headed back into coronavirus lockdown.
Asia’s naphtha crack eased to a two-session low of $94.13 a tonne on Tuesday but tighter supplies on the back of lower East-bound cargoes pushed the intermonth spread to $21.50 a tonne, highest since Jan. 29.
The August crack is higher at $ 0.70 /bbl
Asia’s gasoline crack fell to a three-session low of $1.75 a barrel as new coronavirus infections surfacing in countries which had eased lockdown measures could hurt demand recovery.
The August crack is higher at $3.45 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10-ppm gasoil dropped to 59 cents a barrel to Singapore quotes on Tuesday, compared with 62 cents per barrel a day earlier.
Cash differentials for jet fuel in Singapore were at a discount of 42 cents a barrel to Singapore quotes on Tuesday, compared with a discount of 44 cents per barrel on Monday.
The prompt-month time spread for the aviation fuel in Singapore remained in a contango structure to trade a discount of 70 cents a barrel on Tuesday.
The August crack for 500 ppm Gasoil is lower at $5.85 /bbl with the 10 ppm crack at $ 6.70 / bbl. The regrade is at -$ 3.50 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash differentials for cargoes of both 0.5% VLSFO and 380-cst HSFO flipped to premiums on Tuesday, lifted higher by elevated buying interest since the start of the month.
380-cst HSFO cash premiums soared to plus $1.69 per tonne to Singapore quotes, up from a 21 cent discount in the previous session and its highest since Feb. 21.
Similarly, VLSFO premiums flipped to a three-session high of 37 cents a tonne above Singapore quotes, up from a discount of 90 cents a tonne on Monday.
The August crack for 180 cst FO is higher at – $2.25 /bbl with the visco spread at $1.00 /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.
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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.