Crude Oil
Oil prices eased on Thursday as new restrictions to stem a surge in COVID-19 infections dimmed the outlook for economic growth and fuel demand.
Brent futures fell 16 cents to settle at $43.16 per barrel. WTI futures fell 8 cents to settle at $40.96 per barrel.
Earlier in the day, both benchmarks were down more than $1 a barrel. However, large product draws inspired a comeback in prices.
US Gulf offshore shut crude oil production is 24% or, 440 KB/D. Also, 12% of natural gas output, or 330 mmcfd, remains shut as of Thursday after last week’s Hurricane Delta, BSEE said.
In the United States, the number of Americans filing new claims for jobless benefits rose last week to a two-month high. President Donald Trump said he is willing to raise his offer of $1.8 trillion for a COVID-19 relief deal with Democrats in the U.S. Congress, but the idea was shot down by his fellow Republican, Senate Majority Leader Mitch McConnell.
doe data
The DOE data showed a huge draw in distillate stocks which seemed to have taken the market totally by surprise. The draw in crude stocks seems to be attributable to the shutting in of production therefore, there is not too much of a surprise element in that.
However, the reported draw in crude stocks seems to be overstated.
In fact, in the previous week as well, the material balance showed a huge build in crude stocks which didn’t seem to have been captured in the reported numbers. This may well reappear in future adjustments. US crude exports fell to a 14-month-low of 2.135 MB/D over the week ended 9 Oct’20, and are expected to remain weak into 2021, as sources note poor demand in the export market.
The distillate draw seems to have arisen out of a huge increase in demand which is supportive for the market.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 1,102,431 (+6,113 DoD) yesterday. The total number of active cases rose by around 170,000 DoD to 8.68 million. (Click here for details).
Naphtha
Asia’s naphtha inter-month spread flipped to a discount for the first time since August, while the crack value fell to a 1-1/2-month low of $80.50 a tonne as higher supplies weighed.
Despite vibrant spot purchases for naphtha scheduled for second-half November delivery since Oct. 8, supplies remained ample due to high volumes of East-bound cargoes. This has dragged prices down as seen in this week’s deals.
The November crack is higher at $ 2.10 /bbl
Gasoline
No fresh news on the gasoline markets.
The November crack is lower at $ 3.10 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for 10 ppm gasoil inched lower on Thursday as ample supplies muted demand for physical cargoes, while onshore middle distillate inventories in Singapore rose to a two-week high.
Cash discounts for gasoil with 10 ppm sulphur content widened by 2 cents to 50 cents a barrel to Singapore quotes on Thursday.
The October/November time spread for 10 ppm gasoil in Singapore narrowed its contango structure to trade at a discount of 45 cents per barrel on Thursday, compared with minus 48 cents per barrel a day earlier.
The November crack for 500 ppm Gasoil is higher at $2.90 /bbl with the 10 ppm crack at $ 3.70 / bbl. The regrade is at -$ 1.65 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 180-cst HSFO cash premium extended gains on Thursday to scale a more than eight-month high of $6.53 per tonne to Singapore quotes, as buying interest in the Singapore trading window remained strong. Two 180-cst HSFO cargoes traded at premiums of $7 per tonne on Thursday, up from as much as $6 per tonne in the previous session and compared with a premium of $2 per tonne paid for a similar cargo last week.
The November crack for 180 cst FO is higher at $0.00/bbl with the visco spread at $1.25 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity 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.