Oil prices rose for a third straight week on speculation of runaway summer demand for fuels, although some investors were keeping a wary eye on gasoline, which hasn’t performed to expectations since the start of the peak U.S. driving season.
Brent crude did a final trade of $72.59 per barrel before the weekend, after settling Friday’s trade at $72.69, up 17 cents, or 0.2%. Brent earlier rose to a session peak of $73.07, the highest for a day since May 2019.
WTI futures did a final trade of $70.81 before the weekend, after settling Friday at $70.91, up 62 cents, or 0.9%. Its session high was $71.23, a peak since October 2018.
Brent ended the week up 1.1%, after last week’s gain of 3% and the previous week’s rally of 5%. WTI showed a 1.9% gain, extending the 5% rise and 4% rally in the two weeks prior.
The International Energy Agency, which represents the interests of Western oil consumers, said in its monthly report that global producers would need to boost output to meet demand set to recover to pre-pandemic levels by the end of 2022.
Kuwait’s KPC increased its OSPs for crude loading in Jul’21 and bound for Asia and Northwest Europe, but lowered its price for Khafji crude headed to Asia and kept unchanged prices for crude going to the US.
OPEC and its allies maintained strong compliance with agreed oil output targets in May’21 of 115%, when the first part of a gradual production increase took effect, according to figures given by an OPEC+ source on Friday.
China’s independent refineries are snapping up fuel oil, resuming imports after a nearly five-year hiatus, as Beijing’s crackdown on crude oil quota trading along with new fuel taxes limit refinery feedstock options.
US energy firms added 6 rigs to total 365 (+166 YoY), the highest since Apr’20, according to Baker Hughes, as growth in drilling slows despite crude prices hitting their highest since 2018.
Money managers raised their net long US crude futures and options positions by 27,949 contracts to total 424,476 in the week to 8 Jun’21, the US CFTC said on Friday.
At a global level, the death toll from the COVID-19 virus rose to 3.82 Million (+6,784 DoD) yesterday. The total number of active cases rose fell by around 70,000 DoD to 12.15 million. (Click here for details).
Asia’s naphtha crack climbed on Friday, recouping most losses incurred a day earlier, amid concerns of tight arbitrage supplies from Europe in June coupled with expectations for firmer Asian demand.
The naphtha crack jumped to $104.53 a tonne from $100.25 a tonne in the previous session.
The July crack is lower at $0.05 / bbl
Asia’s gasoline crack was little changed at $5.70 a barrel, down 2 cents from the previous session but higher than the $5.18 a barrel at the start of the week.
The gasoline market has been supported by expectations of a rebound in demand in Europe and the United States and hopes for demand recovery in Asia, as countries slowly begin to ease restrictions following a recent wave of COVID-19 infections.
ARA gasoline stocks were also at a three-week low in the week to June 10 at 1.13 million tonnes, down 4% from the previous week and 20% lower from last year, the data showed.
The July crack is lower at 8.45 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asian refining margins for 10 ppm gasoil rose for a second consecutive session on Friday as seasonal refinery turnarounds have tightened supplies, although regional demand continues to remain lacklustre due to COVID-19 restrictions.
Cash discounts for gasoil with 10 ppm sulphur content widened by a cent to 11 cents per barrel to Singapore quotes on Friday.
Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub dropped 7.4% to 2.1 million tonnes in the week ended June 10, data from Dutch consultancy Insights Global showed.
Cash discounts for jet fuel narrowed by 6 cents to 35 cents per barrel to Singapore quotes on Friday.
The Asian aviation sector is seeing further headwinds with regional carriers cutting capacity in Jun’21, to 37.3% below 2019 levels, as demand evaporates due to rising coronavirus infections, OAG said 10 Jun’21.
The July crack for 500 ppm Gasoil is lower at $6.65 /bbl with the 10 ppm crack at $ 8.55 /bbl. The regrade is at -$ 0.35 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) front month time spread flipped back to a narrow backwardation, while the crack to Dubai crude snapped five straight sessions of declines, Refinitiv data in Eikon showed, on prospects of tightening supplies.
The tighter supply outlook comes as China’s independent refineries are snapping up fuel oil, resuming imports after a nearly five-year hiatus, as Beijing’s crackdown on crude oil quota trading along with new fuel taxes limit refinery feedstock options.
Five companies, including four refineries based in the Shandong province and one local trader, booked 5.2 million barrels of fuel oil from Russia and the Middle East in recent few weeks for deliveries from late June through July, four traders and two refinery officials familiar with the transactions told Reuters.
“(This) should have a trickle down effect on 0.5% (VLSFO prices) in Singapore as the majority of these grades were going to the VLSFO bunker blend pool,” said a fuel oil trader.
Fuel oil stocks in the ARA refining and storage fell by 63,000 tonnes to a two-week low of 1.31 million tonnes in the week ended June 10, data from Dutch consultancy Insights Global (IG) showed.
The June crack for 180 cst FO is higher at -$6.45 /bbl with the visco spread at $1.05 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No fresh action today.
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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.