Crude Oil
Oil prices stayed steady on Tuesday.
Brent crude rose 9 cents to settle at $45.46 a barrel, while WTI closed unchanged at $42.89 per barrel.
US upstream operators that slashed activity nearly six months ago appear eager to resume more normalized activity, but assorted headwinds that include low oil prices and wariness of financially over-extending themselves make meaningful oil production growth unlikely in the next year, top industry experts said Tuesday.
The U.S. Congress has so far failed to agree on another fiscal relief package to stem economic fallout from the pandemic. Meanwhile, some European countries have renewed travel quarantines, which impact jet and motor fuel demand.
api data
A large build in gasoline inventories which offset a modest draw in crude oil inventories cooled bullish sentiment in markets somewhat on Tuesday afternoon. Crude inventories fell by 4.3 million barrels to about 512 million barrels, more than analysts’ expectations for a 2.7 million-barrel draw.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 777,228 (+6,312 DoD) yesterday, with the total number of active cases falling by 8,200 odd to 6,473,400. (Click here for details).
Naphtha
Asia’s naphtha crack rose to a three-week high of $61.30 a tonne, but the inter-month spread remained in a contango structure for the sixth straight session on ample supplies.
The September crack has eased to $0.60 /bbl.
Gasoline
Asia’s gasoline crack extended gains on Tuesday to a fresh 5-1/2-week high of $2.49 a barrel, with demand seen stronger in the United States.
Gasoline output in China was seen at 11.78 million tonnes, up 3.7% from last year. But China’s total output for the first seven months at nearly 72.5 million tonnes were down 10.5% from a year ago.
The September crack is lower at $3.55 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash discounts for jet fuel widened on Tuesday, to their biggest discounts in two months, as ongoing border and travel restrictions continued to impair aviation demand.
Cash discounts for jet fuel were at a 81 cents a barrel to Singapore quotes on Tuesday, the widest since June 23. They were at a discount of 73 cents per barrel a day earlier.
Refining margins or cracks for jet fuel flipped to a discount of 50 cents a barrel to Dubai crude during Asian trading hours on Tuesday, turning negative for the first time since May 29. There were at 35 cents a barrel over Dubai crude on Monday.
The September crack for 500 ppm Gasoil is higher at $5.30 /bbl with the 10 ppm crack at $ 6.10 / bbl. The regrade is at -$ 5.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s cash premiums for 380-cst HSFO climbed on Tuesday to their highest in more than two weeks, as interest in buying physical cargoes rose amid tightening supplies. The cash premium for 380-cst HSFO rose to $1.83 per tonne to Singapore quotes on Tuesday, the highest since July 30. They were at 57 cents per tonne a day earlier.
The 380-cst HSFO barge crack for September was at a discount of $6.22 a barrel to Brent, compared with minus $6.40 a barrel on Monday.
HSFO refining margins have got some support over the last week, partly helped by pockets of demand from refining and power generation.
Meanwhile, the front-month VLSFO crack rose to $8.58 per barrel against Dubai crude during Asian trading hours, up from $8.33 per barrel on Monday.
The September crack for 180 cst FO is higher at – $1.35 /bbl with the visco spread at $0.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity today. If FO cracks dip below -$1.00 / bbl, we will consider hedging them.
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.