Crude Oil
Oil prices rose more than 2% on Tuesday, supported by hurricane supply disruptions in the United States, but demand concerns loomed as energy industry forecasters predicted a slower-than-expected recovery from the pandemic.
Brent crude rose 92 cents to settle at $40.53 a barrel, while WTI crude rose $1.02 to settle at $38.28 per barrel.
Futures gained ahead of Hurricane Sally’s expected landfall on the U.S. Gulf Coast. More than a quarter of U.S. offshore oil and gas production was shut and key exporting ports were closed as the storm’s trajectory shifted east toward western Alabama, sparing some Gulf Coast refineries from high winds.
The outlook for oil demand remained weak. The IEA trimmed its 2020 outlook by 200 kbpd to 91.7 million bpd, citing caution about the pace of economic recovery. The IEA’s demand revision aligns with forecasts from major oil industry producers and traders.
The WTO ruled on Tuesday that additional tariffs imposed by the US against China in 2018 were inconsistent with global trading rules.
api changes
The huge gasoline build coupled with the equally huge gasoline draw is suggestive of a significant drop in gasoline demand. We will await the official data release later today.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 938,483 (+6,005 DoD) yesterday. The total number of active cases rose by around 11,000 to 7,248,248. (Click here for details).
Naphtha
Asia’s naphtha crack rose for the second day to hit a fresh two-month high of $87.63 a tonne on Tuesday on firm demand but persistent tight supplies.
A second round of production disruption in the United States due to storms could affect East-bound naphtha cargoes as Europe may again channel naphtha to make gasoline.
The October crack is lower at $ 2.00 / bbl.
Gasoline
Asia’s gasoline premiums to Brent crude rose to a fresh 2-1/2 month high of $4.25 a barrel for more or less the same reasons that naphtha prices have risen.
The October crack is higher at $ 4.15 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for jet fuel weakened on Tuesday, hurt by muted buying interest in the physical market, while the prompt-month spread for the aviation fuel in Singapore widened its contango structure.
Cash discounts for jet fuel were at $1.22 a barrel to Singapore quotes on Tuesday, while the September/October time spread for jet traded at a discount of $1.12 per barrel.
The commercial aviation sector would likely remain under pressure even after border restrictions are relaxed, as travellers would refrain from flying for an extended period of time to avoid infections and quarantine requirements.
The October crack for 500 ppm Gasoil is higher at $2.75 /bbl with the 10 ppm crack at $ 3.25 / bbl. The regrade is at -$ 3.95 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The cash premium for Asia’s 0.5% VLSFO firmed on Tuesday, climbing to a near one-month high despite a continued absence of physical trade activity in the Singapore window.
No physical fuel cargo trades were reported in the Singapore window for a fourth session straight. The last time a VLSFO cargo traded was on Sept. 8.
Front-month VLSFO time spreads also fired to a near six-week high. Expectations of a declining supply overhang amid signs of falling onshore inventories in the Singapore hub and firm bunkering demand helped improve sentiment.
The October crack for 180 cst FO is lower at – $2.35 /bbl with the visco spread at $0.65 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh transactions 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.