Crude Oil
Oil prices were uncertain but largely unchanged as soft US fuel demand as well as Covid-19 fears lingered.
Brent crude fell 9 cents to settle at $45.37 a barrel, while WTI rose 4 cents to $42.93 per barrel.
The U.S. central bank is considering policy tweaks that could sustain aggressive stimulus measures.
Global oil demand should recover to pre-pandemic levels as soon as the fourth quarter, the Saudi Energy minister said, while urging compliance by fellow OPEC+ group members with a global deal to cut output.
EU leaders on Wednesday reaffirmed their opposition to Turkey’s “illegal” drilling activities offshore Cyprus and agreed that “all options will be on the table” at the next European Council summit in Sep’20.
IOC, India’s top refiner, is close to winning its first contract to export up to 720 KT of clean products to Mauritius under an annual deal from Nov’20, two sources familiar with the matter said.
doe data
U.S. EIA reported that crude oil stockpiles fell 1.6 million barrels last week inspite of refining runs falling marginally. Given that exports also fell drastically, it is next to impossible to reconcile this with our material balance statement below.
The 4 week average fuel demand was down 14% from the year-ago, the data showed. A drop of close to 500 kbpd in gasoline imports would be the major cause for the draw.
Distillate stocks also apparently built a lot more than the number reported by the EIA as per the statement above.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 790,195 (+6,676 DoD) yesterday. The total number of active cases rose by 10,500 odd to 6,483,917. (Click here for details).
Naphtha
Asia’s naphtha crack similarly fell and was at a four-session low of $56.95 a tonne, with the value trading at a discount of more than $1 a barrel to Brent crude due to ample supplies.
The September crack is steady at $0.60 /bbl.
Gasoline
Asia’s gasoline crack eased 1% to $2.49 a barrel on Wednesday, tracking losses in Brent crude, but the current petrol margin remained near a 5-1/2-week high.
Light distillates inventories held in Fujairah in the week ended Aug. 17 fell to a three-week low of 6.9 million barrels, data from S&P Global Platts showed. This was 9% lower than a year ago.
The September crack is higher at $4.15 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash discounts for 10 ppm gasoil narrowed marginally on Wednesday, but still within close sight of multi-week lows.
Cash differentials for 10 ppm gasoil were at a discount of 45 cents a barrel to Singapore quotes on Monday. This compares with a 46-cent discount on Tuesday, the weakest level since May 28.
The front-month time spread for the benchmark gasoil grade in Singapore remained in a contango structure to trade at a discount of 43 cents per barrel on Wednesday.
Cracks for jet fuel , which had turned negative in the previous session, flipped back to a premium of 29 cents a barrel over Dubai crude on Wednesday.
Middle-distillate inventories in Fujairah dropped 3.8% to 3.4 million barrels in the week ended Aug. 17, 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 September crack for 500 ppm Gasoil is lower at $5.20 /bbl with the 10 ppm crack at $ 5.95 / bbl. The regrade is at -$ 5.00 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO time spread widened on Wednesday, while cash differentials for the marine fuel grade weakened amid muted buying interests for physical cargoes.
The September/October time spread remained in a contango structure to trade at a discount of $2.50 per tonne on Wednesday, compared with minus $2 per tonne a day earlier.
Cash discount for Asia’s 0.5% VLSFO was at $3 a tonne to Singapore quotes, compared with a discount of $1.70 per tonne on Tuesday.
The front-month VLSFO crack slipped to $8.47 per barrel against Dubai crude during Asian trading hours, down from Tuesday’s $8.58 per barrel.
Fujairah inventories for heavy distillates and residues dipped 44,000 barrels, from the previous week to 13.751 million barrels, data via S&P Global Platts showed. Compared with year-ago levels, the weekly fuel oil inventories at FOIZ were 47% higher. Fuel oil stocks at FOIZ have averaged 14.2 million barrels so far in 2020, compared with a weekly average of 10.8 million barrels in 2019.
The September crack for 180 cst FO is lower at – $1.45 /bbl with the visco spread at $0.90 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity 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.