Oil prices rose more than 2% on Thursday, turning positive as OPEC and its allies said the producer group would crack down on countries that failed to comply with output cuts.
Brent crude rose $ 1.08 to settle at $43.30 a barrel, while WTI crude rose 81 cents to settle at $40.97 per barrel.
The panel of major producers, including Saudi Arabia and Russia, did not recommend any changes to their current output reduction target of 7.7 mbpd, or around 8% of global demand, according to a draft press release and an internal report.
The OPEC news overshadowed the restart of U.S. offshore production after Hurricane Sally passed through the Gulf of Mexico and bearish U.S. economic news. U.S. energy companies were starting to return crews to offshore oil platforms in the Gulf of Mexico after Sally halted operations for five days, shutting down nearly 500 kbpd of output.
Saudi Arabia’s crude oil exports rebounded in Jul’20 to 5.73 MB/D from a record low in Jun’20 of 4.98 MB/D, as it crude production rose 13.3% MoM to 8.48 MB/D, official data showed on Thursday.
The Saudi Energy Minister warned traders on Thursday against betting heavily in the oil market saying he will try to make the market “jumpy” and promised those who gamble on the oil price would be hurt “like hell”.
The Russian Energy Minister expects global oil demand to recover fully in Q2’21, he said on Thursday, adding that OPEC+ should restore output gradually in line with the demand recovery so not to overheat the market.
At a global level, the death toll from the COVID-19 virus rose to 950,280 (+5,579 DoD) yesterday. The total number of active cases surged by around 70,000 to 7,358,943. (Click here for details).
Asia’s naphtha crack hit a 10-week high of $89.85 a tonne on Thursday as supply tightened due to low refinery runs.
Asia being net short of naphtha as a petrochemical feedstock, relies on East-bound cargoes from the United States, Europe and the Mediterranean to fill some of the supply gaps not met by dominant supplier Middle East.
The October crack is lower at $ 2.40 / bbl.
Asia’s gasoline premium to Brent was at a two-session high of $4.18 a barrel.
Singapore’s onshore light distillates stocks surged by about 2.7 million barrels in the week to Wednesday to hit a record high of 17.45 million barrels, data from Enterprise Singapore showed.
The October crack is higher at $ 4.70 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for jet fuel were at $1.19 a barrel to Singapore quotes on Thursday, compared with a discount of $1.21 a barrel on Wednesday.
Asian refining margins for jet fuel inched higher on Thursday, but the market for the aviation fuel is expected to remain under pressure for the remainder of this year due to ongoing coronavirus-related travel restrictions across the region. Refining margins, also known as cracks, for jet fuel were at a discount of $1.08 per barrel to Dubai crude, compared with minus $1.29 per barrel a day earlier.
A majority of international long-haul flights remain grounded due to prolonged border restrictions, while travellers are refraining from flying to keep away from infections and quarantine requirements.
Singapore’s middle distillate inventories rose 1.4% to 15.3 million barrels in the week to Sept. 16, according to Enterprise Singapore data. Weekly Singapore middle distillate inventories have averaged about 13.2 million barrels so far in 2020. This week’s stocks were 22.4% higher year-on-year.
The October crack for 500 ppm Gasoil is higher at $2.50 /bbl with the 10 ppm crack at $ 3.00 / bbl. The regrade is at -$ 2.90 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s cash differential for 0.5% VLSFO on Thursday climbed to its narrowest since early-August despite an absence of physical trade liquidity in the Singapore trading window. Demand remained thin in the trading window with no fuel oil cargo trades being reported in the Singapore window for a sixth session straight. The last time a VLSFO cargo traded was on Sept. 8.
This came as Singapore’s residual fuel oil inventories rose 3% in the week ended Sept. 16. Onshore fuel oil stocks rose 575 KB to a two-week high of 21.31 million barrels according to the Enterprise Singapore data.
The October crack for 180 cst FO is lower at – $2.70 /bbl with the visco spread at $0.75 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We shall lay on another tranche of Jap Naphta – Dubai for November at current levels of $ 2.10 per bbl
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.