Crude Oil
Oil prices jumped more than 4% on Wednesday, following a drawdown in U.S. crude and gasoline inventories and as Hurricane Sally forced a swath of U.S. offshore production to shut.
Brent crude rose $ 1.69 to settle at $42.22 a barrel, while WTI crude rose $1.88 to settle at $40.16 per barrel.
Sally, which made landfall on the U.S. Gulf Coast as a Category 2 hurricane, also boosted oil prices as more than a quarter of offshore output shut due to the storm. Roughly 500,000 barrels per day (bpd) of offshore crude oil production was taken offline in the U.S. Gulf of Mexico.
China’s crude oil throughput in August rose from a year ago, reaching the second-highest on record, as refineries worked to digest record imports brought in earlier this year. The country processed 59.47 million tonnes of crude oil in August, or 14 million barrels per day (bpd), up 9.2% from a year earlier and the current rates are second only to the record of 59.56 million tonnes in July.
Nigeria’s NNPC has extended for six months its contracts with private companies to swap crude oil for fuels. The initial one-year contracts to exchange more than 300 KB/D with 15 company pairings were due to expire in Oct’20.
India shipped in about 3.95 MB/D of oil in Aug’20, the highest volume since Apr’20, with African nations accounting for about 17.5%, or an eleven month high of 688 KB/D, shipping data provided by trade sources showed.
DOE data
U.S. crude stocks fell 4.4 million barrels last week to 496 million barrels, their lowest since April, the U.S. Energy Information Administration said. U.S. gasoline stocks fell marginally by 400 KB.
While refining utilization rates ticked up 4 percentage points, it was not corroborated by a corresponding increase in production of products as gasoline production was actually reported lower while distillate production was static.
The material balance statement above suggests that the data is actually a lot more bearish than reported.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 944,716 (+6,229 DoD) yesterday. The total number of active cases rose by around 39,000 to 7,287,845. (Click here for details).
Naphtha
Asia’s naphtha crack eased to a three-session low of $86.30 a tonne, weighed down by stronger oil prices.
The October crack is higher at $ 2.50 / bbl.
Gasoline
Asia’s gasoline premiums to Brent crude also fell to a 3 session low of and $3.94 a barrel.
The October crack is higher at $ 4.65 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian refining margins for 10 ppm gasoil dropped to their weakest in a week on Wednesday as crude prices firmed, while cash discounts for the industrial fuel lingered near multi-week lows due to sluggish demand and abundant supplies.
Cash discounts for 10 ppm gasoil were at 65 cents a barrel to Singapore quotes, compared with a discount of 61 cents per barrel a day earlier.
Middle-distillate inventories in the Fujairah Oil Industry Zone dipped 0.3% to 3.8 million barrels in the week ended Sept. 14, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 3.9 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019.
The October crack for 500 ppm Gasoil is lower at $1.95 /bbl with the 10 ppm crack at $ 2.45 / bbl. The regrade is at -$ 3.50 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO crack climbed to a near one-month high on Wednesday despite strong crude oil price gains.
The front-month VLSFO crack against Dubai crude rose to $8.41 a barrel at the end of Asian trading hours, up from $7.25 a barrel in the previous session and its highest since Aug. 19.
Fuel oil inventories in the Fujairah bunkering and storage hub fell 6% to a more than six-month low in the week ended Sept. 14. Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 790 KB from the previous week to 12.552 million barrels, their lowest since the week to March 9, data via S&P Global Platts showed.
The October crack for 180 cst FO is flat 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.