Crude Oil
Oil prices on Monday jumped to their highest in over two months on multiple positive signals.
Brent crude settled at $34.81 /bbl, up $ 2.31. WTI futures gained $2.39 to settle at $31.82 /bbl.
Markets were clearly cheered by early results on a potential coronavirus vaccine. This in turn, lead to optimism about a quick resumption in economic activity. Also encouraging the markets were signs that producers were following through on planned output reductions.
US crude production from seven major shale formations is expected to fall by a record 197 KB/D in Jun’20 to 7.822 MB/D, the lowest since Aug’18, the US EIA said in a monthly report on Monday. Kpler said OPEC+ seaborne oil exports have declined by 6.3 MB/D over the past month towards 27 MB/D, with Saudi Arabia showing the largest cutback, averaging 7.26 MB/D, down 2.24 MB/D MoM.
In the United States, the phased reopening of business and social life gained traction with more Americans emerging from coronavirus lockdowns and stock markets rising on early test results of a potential vaccine. Summer weather is enticing the rest of the world to emerge from coronavirus lockdowns too. Shops and restaurants were reopening in Italy on Monday, while other centers of the outbreak such Spain and Portugal will gradually lift restrictions.
A recovery in fuel demand in India gathered momentum in the first half of May’20 versus Apr’20 as curbs on transport and industrial activity were partly lifted in areas that have contained the spread of coronavirus, data showed.
Hedge funds and other money managers sold the equivalent of 19 MB in the six most important petroleum futures and options contracts in the week ending on 12 May’20. Portfolio managers had earlier bought 281 million barrels over the previous six weeks.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 319,965 (+3,445 DoD) yesterday, with the total number of confirmed infections at 4,888,124 (+88,858 DoD). (Click here for details).
Naphtha
Asia’s naphtha physical crack surged by another 145% on Monday to reach a near two-and-a-half-week high of $32.20 a tonne, supported by strong demand and improving gasoline fundamentals. More than 2.2 million tonnes of naphtha from the Europe, the United States and Africa are expected to arrive in June, making this the fourth time this year when volumes surpassed the 2 million mark, or more than 30% above 2019’s monthly average.
The June crack is much higher today at -$2.80 / bbl.
Gasoline
No fresh news on the gasoline markets.
The June crack is has also strengthened further to $1.25 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for jet fuel narrowed their discounts on Monday, helped by firmer buying interests for physical cargoes as China’s aviation demand slowly recovers from the coronavirus outbreak.
Cash discounts for jet fuel were at $2.09 a barrel to Singapore quotes on Monday, compared with a discount of $2.20 a barrel on Friday.
Cash discounts for 10 ppm gasoil narrowed to $1.06 per barrel to Singapore quotes on Monday, as against $1.17 per barrel on Friday.
The June crack for 500 ppm Gasoil has leaped to $5.10 /bbl with the 10 ppm crack at $ 5.95 / bbl. The regrade is at -$ 2.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst high-sulphur fuel oil (HSFO) barge crack eased from a near 10-month high in the previous session as crude prices firmed. The front-month barge crack slipped to an $8.05 a barrel discount below Brent crude on Monday, down from a discount of $7.44 a barrel on Friday – its highest since July 31.
The June crack for 180 cst FO is higher at -$2.95 /bbl with the visco spread at $1.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action for 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.