Oil prices slipped about 1% on Monday after global coronavirus cases rose by a record daily amount and on growing U.S. and European tension with China.
Brent crude futures settled at $42.72 a barrel, down 52 cents. U.S. West Texas Intermediate settled down 45 cents at $40.10 a barrel.
The market also remained on edge due to growing U.S. and European disputes with China. The European Union said it is preparing counter-measures on China in response to Beijing’s new security law on Hong Kong.
China announced sanctions against the United States on Monday after Washington penalized senior Chinese officials over the treatment of Uighur Muslims. An OPEC monitoring committee will meet on Tuesday and Wednesday.
Hedge funds have stopped buying oil in recent weeks as the rally that carried prices higher during May-Jun’20 has run out of momentum, selling the equivalent of 21 MB in the six most important petroleum futures and options contracts in the week ending 7 Jul’20.
At a global level, the death toll from the COVID-19 virus rose to 574,981 (+3,731 DoD) yesterday, with the total number of confirmed infections at 13,229,695 (+195,878 DoD). (Click here for details).
The World Health Organization reported more than 230,000 new cases of coronavirus on Sunday, a one-day record. Much of the growth is in the Western Hemisphere, particularly the United States and Latin America. In the United States, infections surged over the weekend as Florida reported an increase of more than 15,000 new cases in 24 hours, a record for any state.
Asia’s naphtha crack fell to a two-week low of $82.08 a tonne as LPG prices dipped to make it more competitive.
LPG can replace between 5 and 15% of naphtha in some of Asia’s naphtha crackers. Petrochemical makers buy spot LPG cargoes from time to time to supplement some of their term supplies. This takes place when LPG prices in the spot market is at least $50 a tonne lower than naphtha.
This week saw South Korean and Japanese buyers snapping up August-September cargoes. Strong demand amid tight supplies have kept spot premiums at more than a four-month high.
The August crack has dropped to -$ 0.55 /bbl
Asia’s gasoline crack gasoline’s premium to Brent hit a five-session low of $2.01 a barrel on Monday.
Gasoline stocks held independently at the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose to a two-week high of 1.29 million tonnes in the week to July 9. This was 8% below the record high gasoline volumes in ARA on June 11. High gasoline inventories were also seen in Singapore in the week to July 8.
The August crack is lower at $3.00 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asian refining margins for 10 ppm gasoil edged higher on Monday, helped by weaker raw material crude prices.
The gasoil EFS was around minus $8 per tonne on Monday. Cash premiums for 10-ppm gasoil were at 67 cents a barrel to Singapore quotes on Monday, up from 58 cents on Thursday.
Global flying capacity has risen to around 53.8 million seats for the week starting 13 Jul’20, 45% of where it was in the same week last year, with most of the growth concentrated in Western Europe and Asia, OAG said.
The August crack for 500 ppm Gasoil is higher at $5.80 /bbl with the 10 ppm crack at $ 6.65 / bbl. The regrade is at -$ 4.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash premiums for cargoes of Asia’s 380-cst HSFO slipped for a second session in a row on Monday, as deal values cooled in the Singapore trading window despite sustained buying interest.
Cash premiums for 380-cst HSFO cargoes narrowed by 12 cents a tonne to $1.73 per tonne to Singapore quotes. The Singapore market was closed for elections on Friday. The cash premiums hit a near five-month high on Wednesday.
The August crack for 180 cst FO is lower at – $2.60 /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.
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.