Oil prices edged lower on Friday on worries that demand would recover more slowly than expected from COVID-19 pandemic lockdowns.
Brent crude fell 16 cents to settle at $44.96 a barrel, while WTI fell 23 cents to $42.01 per barrel.
For the week, Brent was up 0.9% and WTI gained 1.9%.
China’s refinery output hit a record high of 59.56 million tonnes (or 14.03 million barrels per day) in July, up 12% from the same month a year earlier, as several major state plants resumed operations after maintenance overhauls.
US crude oil shipments to China will rise sharply in coming weeks, US traders and shipbrokers and Chinese importers said, as the world’s top economies gear up to review a Jan’20 deal after a prolonged trade war.
The US lost a bid on Friday to extend a UN arms embargo on Iran as the Russian President proposed a summit of world leaders to avoid “confrontation” over a US threat to trigger a return of all UN sanctions on Tehran.
US energy firms cut 4 oil rigs in the week to 14 Aug’20 to total 172 (-598 YoY), according to Baker Hughes. Analysts said higher oil prices will encourage energy firms to slow rig count reductions and possibly start adding some units later this year.
Hedge funds and money managers cut bullish wagers on US crude to the lowest in three months, cutting its combined position by 12,748 to total 355,847 contracts in the week to 11 Aug’20, as hopes dimmed for a swift US economic stimulus package.
At a global level, the death toll from the COVID-19 virus rose to 768,228 (+4,533 DoD) yesterday, with the total number of confirmed infections at 21,818,117 (+212,630 DoD). Probably, a more relevant number is that of active cases. That is currently at 6,491,668. We will track this number going forward for a better sense of the big picture. (Click here for details).
Asia’s naphtha crack rose to a 2-1/2 week high of $60.88 a tonne but the inter-month spread remained at a contango structure.
The September crack has jumped to $1.20 /bbl.
Asia’s gasoline crack surged 36% to reach a five-week high of $2.15 a barrel premium over Brent crude. However, demand in Europe and Asia reflected a weak market where inventories were high.
Gasoline stocks in ARA rose 7% to a record high of 1.47 million tonnes in the week to Thursday.
The September crack is higher at $4.50 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asian refining margins for jet fuel crawled higher on Friday, but the prompt-month spread for the aviation fuel widened its contango structure.
Cash discounts for jet fuel were at a 67 cents a barrel to Singapore quotes on Friday, compared with a discount of 64 cents in the previous session.
The August/September time spread for jet fuel traded at a discount of 71 cents a barrel on Friday, compared with minus 65 cents a day earlier.
Regional airlines continue to face strong headwinds from coronavirus-related restrictions on air travel.
Jet fuel stocks in ARA jumped 8.5% to a record high of 1.03 million tonnes in the week to Aug. 13. ARA gasoil inventories dipped 1.2% to 2.5 million tonnes. Compared with a year earlier, gasoil inventories were down 14.5%, while jet fuel stocks were 41.8% higher.
The September crack for 500 ppm Gasoil is steady at $5.40 /bbl with the 10 ppm crack at $ 6.20 / bbl. The regrade is at -$ 4.80 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Easing supply overhang helped Asia’s 0.5% very low-sulphur fuel oil extend weekly gains, with front-month time spreads , crack values and cash differentials climbing to their highest in at least a week.
Fuel oil flows into East Asia in August were assessed at about 4–4.5 million tonnes with 3.77 million tonnes assessed to date, below July’s volumes of 4.82 million tonnes.
Fuel oil stocks in ARA fell 10% from the previous week to a more than five-month low of 1.22 million tonnes in the week to Aug. 13. Compared with last year, however, the ARA fuel oil inventories were by up 16% and were above the five-year seasonal average of 1.005 million tonnes.
The September crack for 180 cst FO is lower at – $2.45 /bbl with the visco spread at $0.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We will add one more tranche of Jap Nap Dub for September at current levels. We will also add one tranche for October.
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.