Crude Oil
Oil prices settled higher on Wednesday even as crude and distillate stocks surged in the US.
Brent crude futures settled at $43.29 a barrel, up 21 cents in the session. U.S. West Texas Intermediate settled up 28 cents at $40.90 a barrel.
Both benchmarks have been moving in a band of less than 1% in either direction for the last four days.
OPEC member Libya was adding to global supplies by reopening its Es Sider oil terminal for exports.
The latest surge in U.S. coronavirus cases, taking the U.S. total above 3 million, has reduced hopes for a swift recovery in oil demand which has been hammered by the global lockdowns to prevent the virus spreading.
The US Secretary of State accused China of taking “incredibly aggressive action” in a recent clash with India over a disputed section of the nuclear-armed neighbors’ border, saying Beijing had a pattern of instigating territorial disputes.
Japan’s machinery orders unexpectedly rose in May’20, rising 1.7% against a forecast of -5.4%, offering policymakers some comfort capital expenditure has held up despite the hit to corporate profits from the coronavirus pandemic.
DOE data
A surge in net imports of over 2 mbpd helped crude inventories to return to near record levels of 3 weeks ago. U.S. Gulf Coast crude oil stockpiles rose by 5 million barrels to a record high last week. Refinery utilization increased by 2% but was still hovering approximately 17% lower than in the same period last year.
Gasoline inventories tumbled by 4.8 million barrels as demand climbed to 8.8 million barrels per day, the highest since March 20.
The material balance statement suggests that crude stocks may have risen less than reported.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 551,192 (+5,518 DoD) yesterday, with the total number of confirmed infections at 12,155,603 (+213,280 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack fell to a three-session low of $90.55 a tonne on Wednesday, dragged down by raw material oil cost but demand remained strong amid tight supplies. The strong fundamentals have pushed spot premiums higher.
The August crack is steady at $ 0.70 /bbl
Gasoline
No fresh news on the gasoline markets today.
The August crack is higher at $3.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel were at a discount of 37 cents a barrel to Singapore quotes on Wednesday, while the July/August time spread for jet traded at a discount of 68 cents a barrel.
Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 6% to 3.9 million barrels in the week ended July 6, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 3.9 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019.
The August crack for 500 ppm Gasoil is lower at $5.65 /bbl with the 10 ppm crack at $ 6.45 / bbl. The regrade is at -$ 4.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s HSFO market extended gains on Wednesday amid a sustained buying frenzy for cargoes of the fuel in the Singapore trading window. The 380-cst HSFO market saw the biggest gains, with cash premiums and prompt-month time spreads climbing to near five-month highs.
Buying interest also spilled over into the 0.5% VLSFO market, helping lift its cargo cash differential into a narrow premium this week. While the VLSFO market is faced with a near-term oversupply after months of building supplies and slowing marine fuel demand, bullish sentiment in the HSFO market has been boosted by a structural decline in output of the fuel and rising seasonal demand for power generation.
Fujairah Oil Industry Zone (FOIZ) inventories for heavy distillates and residues slipped by 209,000 barrels (33,000 tonnes) from the previous week to 16.265 million barrels (2.561 million tonnes), data via S&P Global Platts showed. Fujairah’s fuel inventories were widening the gap from a record high of 17.168 million barrels (2.704 million tonnes) hit in the week to June 8. Still, the inventories were 65% higher than year-earlier levels.
The August crack for 180 cst FO is higher at – $2.00 /bbl with the visco spread at $1.00 /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.