Oil prices rose more than 2% on Monday as signs that fuel demand was recovering.
Brent futures rose 99 cents to settle at $39.72 a barrel. WTI crude rose 86 cents to settle at $37.12 a barrel.
An OPEC-led monitoring panel will meet on Thursday to discuss whether countries have delivered their share of output reductions.
Also positive for prices, China’s crude oil throughput in May rose 8.2% from a year earlier as independent refiners increased processing to meet the recovery in fuel demand following the easing of lockdowns.
US oil output from seven major shale formations is expected to fall to near a 2-year low of 7.63 MB/D by Jul’20, down 93 KB/D from Jun’20, the US EIA said on Monday.
Nevertheless, fuel demand concerns continue to weigh on market sentiment. More than 25,000 new coronavirus cases were reported on Saturday in the United States, where more than 2 million people have been infected, about a quarter of the cases worldwide. After nearly two months with no new infections, Beijing reported 79 coronavirus cases over the past four days, sparking fears of an outbreak in one of the world’s most populous cities.
Aramco has reduced the volume of Jul’20-loading crude that it will supply to at least five buyers in Asia. The cuts were mainly for medium and heavy grades and were seen at refineries in countries such as China, sources said on Monday.
Economic data from China suggested the world’s second-biggest economy was struggling to get back on track. Industrial output in May expanded 4.4% from a year earlier. Germany’s economic output will also fall further in the second quarter, its economy ministry said on Monday.
At a global level, the death toll from the COVID-19 virus rose to 438,596 (+3,415 DoD) yesterday, with the total number of confirmed infections at 8,108,667 (+124,600 DoD). (Click here for details).
Asia’s naphtha refining margin extended gains to a seven-week high of $59.35 a tonne on strong demand and tighter supplies.
The July crack is higer at -$0.20 / bbl.
Asia’s gasoline crack was also up, reaching a premium at a moderate two-session high of $1.84 per barrel over Brent crude, compared with $1.51 on Friday. Although easing lockdown measures across Europe and Asia have lifted gasoline demand, concerns of a new wave of coronavirus infections hitting China, Japan and the United States were also growing. In China, refinery run rates were higher, but it was not immediately clear how this could affect its gasoline exports next month. China’s May gasoline exports were expected to be at multi-month lows after April’s volumes hit a record high of 1.9 million tonnes.
The July crack is higher at $3.45 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10-ppm gasoil were at 67 cents a barrel to Singapore quotes, the highest since Feb. 12.
The July crack for 500 ppm Gasoil is higher at $5.90 /bbl with the 10 ppm crack at $ 6.75 / bbl. The regrade is at -$ 3.40 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month 0.5% VLSFO crack fell to a near two-week low of $6.40 a barrel against Dubai crude on Monday, as concerns over sluggish demand and ample supplies eclipsed weaker crude oil prices.
One 0.5% VLSFO cargo was reported in the Singapore trading window for the first time since May 18. No HSFO cargo trades were reported.
Cargo ship arrivals in Singapore plummeted to their lowest in nearly three decades in May, dragging sales of marine fuels to a three-month low, data from the Maritime and Port Authority of Singapore (MPA) showed. The number of cargo ships arriving at the world’s top transhipment port fell in May to 3,059, the lowest since at least January 1993, the oldest available figure, the MPA data showed.
Singapore bunker fuel sales volumes in May dropped to 3.925 million tonnes, down 2% from last year and 5% from April.
The July crack for 180 cst FO is higher at – $1.75 /bbl with the visco spread at $1.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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.
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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.