Crude Oil
Oil prices jumped further after the OPEC+ group agreed to extend their output curbs by an extra month.
Brent futures rose $2.31 to settle at $42.30 a barrel. U.S. crude rose $2.31 to settle at $39.55 a barrel.
For the week, Brent gained 19.2% while WTI gained 10.7% on the week. Both contracts have now been rising for 6 weeks in a row.
The U.S. Labor Department reported a surprise fall in the jobless rate to 13.3% last month from 14.7% in April.
This fall in jobless rate supported oil prices. Adding support was Tropical Storm Cristobal.
Energy producers shut down almost 35% of the US Gulf of Mexico’s crude oil production and more than 32% of natural gas supplies ahead of Tropical Storm Cristobal making a southern Louisiana landfall on 7 Jun’20.
Mexico will not join other top oil producers in extending through Jul’20 output cuts aimed at propping up the price of crude, its Energy Minister said on Saturday. Nigeria said on Saturday it was ready to make additional oil output cuts in Q3’20 to compensate for producing more than its quota in May’20 and Jun’20.
US energy firms cut 16 oil rigs in the week to 5 Jun’20 to total 206 (-594 YoY), the lowest since Jun’09, the 5th week in a row the US count fell to a fresh record low, according to Baker Hughes.
Money managers raised their net long US crude futures and options positions by 7,225 contracts to total 401,018 in the week to 2 Jun’20, the US CFTC said on Friday.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 405,081 (+3,382 DoD) yesterday, with the total number of confirmed infections at 7,082,212 (+113,090 DoD). (Click here for details). Post the opening of countries from lockdown, it seems that the disease continues to spread more aggressively.
Naphtha
Asia’s naphtha crack rose for a fifth straight session to hit a six-week high of $56.78 a tonne on strong demand.
Demand for July naphtha cargoes has been strong in Asia at a time when Europe is expected to ship less barrels to Asia due to growing home demand for making petrochemicals.
The July crack is firmer at -$1.65 / bbl.
Gasoline
Asia’s gasoline crack surged to a three-month high at $1.12 a barrel premium to Brent crude on demand recovery hopes.
Gasoline stocks in ARA rose around 8% to a record high of 1.4 million tonnes in the week to Thursday due to slowing exports and high downstream imports into the hub.
The July crack is higher at $2.35 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel were at 32 cents a barrel to Singapore quotes, compared with a discount of 22 cents on Thursday. Jet spot differentials have climbed 58% this week.
Global passenger air traffic has risen 30% in May from a very low level in April, as airlines cut domestic fares to encourage customers to return, the International Air Transport Association (IATA) said on Wednesday.
Gasoil stocks in ARA jumped 5.5% to 2.8 million tonnes in the week to June 4. ARA jet fuel inventories dropped 4.4% to 870,000 tonnes. Compared with a year earlier, jet fuel stocks were 16.9% higher, while gasoil inventories were up 0.5%.
The July crack for 500 ppm Gasoil is higher at $3.30 /bbl with the 10 ppm crack at $ 4.15 / bbl. The regrade is at -$ 2.25 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO market firmed on Friday with cash differentials , front-month time spreads and refining cracks, all rising on Friday and ending the week slightly higher.
Gains, however, were capped by swelling supplies. Residual fuel inventories at key storage and bunkering hubs have ballooned to, or are near record highs this week amid a persistent oversupply and sluggish demand.
ARA fuel oil inventories rose 3% from the previous week to 1.745 million tonnes in the week to June 4, matching a record high reached a month ago. Compared with last year, the ARA fuel oil inventories were 64% higher and were well above the five-year seasonal average of 1.117 million tonnes.
The July crack for 180 cst FO is lower at – $1.50 /bbl with the visco spread at $1.30 /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.