Crude Oil
Oil prices tumbled about 8% a barrel on Thursday, fuelled by renewed concerns about demand destruction as new cases of coronavirus tick up globally.
Brent futures $3.18 cents to settle at $38.55 a barrel. WTI crude fell $3.26 to settle at $36.34 a barrel.
Brent and WTI posted their worst daily drops since April 21 and 27, respectively.
The weakness extended to other asset classes. Equity markets dropped, with the S&P 500 Index down 4% on the day, while U.S. Treasury bonds rallied.
The Fed said U.S. unemployment was set to reach 9.3% at the end of 2020 and it would take years to fall back, while interest rates were expected to stay near zero at least through next year.
International trade is set to plunge by 27% in Q2’20 and by 20% for the year, as major sectors, including the automotive and energy industries, collapse from the effects the pandemic, a UN agency said on Thursday.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 423,086 (+4,951 DoD) yesterday, with the total number of confirmed infections at 7,583,908 (+136,757 DoD). This is the highest single day increase recorded over the last few months. (Click here for details).
Naphtha
Asia’s naphtha refining margin was at a three-session high of $53.63 a tonne on Thursday, supported by firm demand as most crackers were running at high rates or at full throttle.
India’s naphtha sales in May were up by 36.4% to 1.08 million tonnes compared to April.
The July crack is higher at -$0.80 / bbl.
Gasoline
Asia’s gasoline crack fell to a two-session low of $1.75 a barrel premium to Brent, snapping a four-day winning streak as higher inventories in the United States exerted some downward pressure.
Singapore’s onshore light distillates stocks, which comprise mostly gasoline and blending components for petrol, however eased by around 3% or 464,000 barrels, to a two-week low of 15.3 million barrels in the week to June 10, data from Enterprise Singapore showed. But this was still more than 20% higher than inventories a year ago at 12.5 million barrels.
India’s petrol sales in May at 1.77 million tonnes was up almost 82% versus April but it was down by 35.3% from a year earlier.
The July crack is lower at $2.20 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for 10 ppm gasoil rose to their highest in nearly four months on Thursday, helped by a steady buying interest for physical cargoes as countries in the region increasingly ease coronavirus restrictions. Cash differentials for 10 ppm gasoil were at a premium of 59 cents a barrel to Singapore quotes, the highest since Feb. 13.
The gasoil market has tightened partly due to ongoing refinery run cuts and turnarounds in the region. The gasoil EFS traded at minus 30 cents per tonne on Thursday.
Singapore onshore middle distillate stocks rose 1.5% to a two-week high of 14.9 million barrels in the week ended June 10, Enterprise Singapore data showed. The weekly Singapore middle distillate inventories have averaged at 12.6 million barrels so far in 2020. This week’s stocks were 41.1% higher year-on-year..
The July crack for 500 ppm Gasoil is lower at $4.60 /bbl with the 10 ppm crack at $ 5.45 / bbl. The regrade is at -$ 2.50 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 180-cst HSFO prompt-month time spread flipped into backwardation on Thursday, as Middle East producers curb heavy sour crude supplies and on firm refining feedstock demand for high-sulphur residual fuels.
The June/July 180-cst HSFO time spread jumped to a 75 cent per tonne premium, up from a discount of 75 cents in the previous session.
Spot cash differentials have also firmed this week, climbing to its narrowest discount in two months at 13 cents a tonne to Singapore quotes on Thursday, up from minus 63 cents in the previous session and minus $6.03 a tonne last week.
Singapore’s residual fuel oil inventories stayed almost unchanged in the week ended June 10. Onshore fuel oil stocks crept up by 2,000 barrels to 25.687 million barrels in the week to June 10, data from Enterprise Singapore showed. Residual fuel stocks were 8% higher than a year ago, nearing a more than one-year high of 26.172 million barrels hit in the week to May 20.
The July crack for 180 cst FO is lower at – $1.40 /bbl with the visco spread at $1.35 /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.