Crude Oil

Oil prices rose 2% on Wednesday, supported by a sharp drop in U.S. crude inventories.

Brent crude futures settled at $43.79 a barrel, up 89 cents. U.S. West Texas Intermediate settled up 91 cents at $41.20 a barrel.

Prices were also supported by promising early data for a potential COVID-19 vaccine.

The OPEC+ group agreed on Wednesday to ease oil supply curbs from Aug’20 to 7.7 MB/D until Dec’20. However, effective curbs would be deeper at 8.1-8.3 MB/D because countries which overproduced in May-Jun’20 would make extra cuts in Aug’20 and Sep’20.

China warned the UK PM on Wednesday that his decision to ban Huawei from the 5G network would cost Britain dearly in investment, casting the move as the result of politicised pressure from the US President.

Reliance Industries’ plans to sell 20% stake in its oil-to-chemical business to Saudi Aramco is delayed, the chairman of the Indian conglomerate said on Wednesday. The Aramco deal was initially expected to be completed by Mar’20.

Doe changes

The DOE corroborated the drop in crude stocks reported by the API. The drop, almost entirely appears to have been caused by a sharp drop in crude imports which actually suggests a much sharper drop than reported.

While the drop in gasoline stocks too were echoed by the DOE, it also showed a drop in distillate stocks contrary to what was reported by the API. A healthy growth in distillate demand would appear to have caused the draw.

Covid 19

At a global level, the death toll from the COVID-19 virus rose to 586,194 (+5,755 DoD) yesterday, with the total number of confirmed infections at 13,683,790 (+234,331 DoD). (Click here for details).


Asia’s naphtha crack rebounded from a two-week low on Wednesday to reach $77 a tonne, as demand emerged. 

The August crack has improved to -$ 0.70 /bbl 


Gasoline’s premium to Brent also recovered from a two-week low to reach a three-session high of $2.10 a barrel. 

The August crack is higher at $2.75 /bbl

Click Here for a graphical depiction of Global Gasoline stocks by region.


No fresh news on the distillate market.

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

Bunker fuel differentials for Asia’s 0.5% VLSFO were relatively steady over the past week, holding near record lows as ample supplies and sluggish demand continued to weigh on the market.

Discounts for delivered VLSFO bunkers were at about $43-$44 per tonne against Singapore 10ppm quotes on Wednesday. The delivered bunker discount scraped a record low of around $45-$46 a tonne at the start of the month.

Indian refiners have expressed cautious optimism that domestic fuel oil consumption will increase as a result of bullish power sector demand over Q3’20, even as concerns over lockdown measures remain, according to refinery sources.

Meanwhile, fuel oil stocks held in the Fujairah oil hub inched higher in the week to July 13, snapping four straight weeks of marginal declines.

The August crack for 180 cst FO is higher at – $2.80 /bbl with the visco spread at $0.85 /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.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

Leave a Comment