Crude Oil
Crude prices rose more than 2% on Wednesday.
Brent crude rose 93 cents to settle at $45.43 a barrel, while WTI rose $ 1.06 to $42.67 per barrel.
The EIA’s downward revision on Tuesday to a key U.S. oil production forecast for this year lent support to prices.
World oil demand will fall by 9.06 million bpd this year, OPEC said in its monthly report on Wednesday, more than the 8.95 million bpd decline expected a month ago.
DOE data
Yesterday’s DOE data, like the API data showed draws across the board. Crude was hit particularly strongly with a drop in production and a drop in net imports hitting crude stocks hard.
U.S. fuel demand rose to 19.37 million barrels per day last week, the highest since March, data from the Energy Information Administration showed. Refiners in the United States had ramped up output to 79.6% of total capacity, the highest since late March, despite gasoline and distillate demand remaining 10% below pre-pandemic levels.
Our material balance statement suggests that the draw should have been bigger than reported.
As per the above, gasoline stocks appear to have built thanks to the huge rise in imports. Having said that, distillates should have shown a bigger draw as well.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 746,411 (+6,822 DoD) yesterday, with the total number of confirmed infections at 20,797,382 (+285,596 DoD). (Click here for details).
Naphtha
Asia’s naphtha spot prices flipped to discounts in South Korea on Wednesday for the first time in three months. The Asian naphtha crack in the meantime fell to a 1-1/2 week low of $53.55 a tonne.
The price of open-specification naphtha for second-half September was 75 cents below that of second-half October.
The September crack has improved to $0.15 /bbl.
Gasoline
Asia’s gasoline crack edged up 1 cent to a two-session high of $1.84 a barrel but overall demand was not particularly robust.
The September crack is lower at $3.05 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10 ppm gasoil were at a discount of 21 cents a barrel to Singapore quotes on Wednesday, a level not seen since June 1. They were at a 9-cent discount a day earlier.
The August/September time spread for the benchmark gasoil grade in Singapore traded at a discount of 18 cents per barrel on Wednesday.
India’s fuel demand dragged lower in July, posting its fifth consecutive year-on-year decline, as a spike in coronavirus cases and floods in many parts of the country restricted economic activity.
The September crack for 500 ppm Gasoil is higher at $5.50 /bbl with the 10 ppm crack at $ 6.30 / bbl. The regrade is at -$ 4.50 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month 0.5% VLSFO crack against Dubai crude rose to a more than one week high on Wednesday, despite higher crude oil prices.
The September crack for 180 cst FO is higher at – $2.50 /bbl with the visco spread at $0.90 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The naphtha crack has once again, inexplicably, moved into positive territory. We will hedge the September crack at current levels of $ 0.15/bbl
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.