Crude Oil
Oil prices edged lower on Friday as concerns about the surge in coronavirus cases.
Brent crude futures settled at $43.14 a barrel, down 23 cents. U.S. West Texas Intermediate settled down 16 cents at $40.59 a barrel.
Both contracts were little changed from a week earlier.
Fuel demand has broadly recovered from a 30% drop in April after nations worldwide restricted movements and businesses shuttered. Consumption remains below pre-pandemic levels, however, and fuel purchases are falling again as infections rise.
The US economy is forecast to shrink by 6.6% in 2020 due to the shock of the coronavirus pandemic, but a resurgence in coronavirus infections and a systemic increase in poverty could worsen that outlook, IMF warned on Friday.
US energy firms cut 1 oil rig in the week to 17 Jul’20 to total 180 (-599 YoY), the 11th week in a row the US count fell to a fresh record low, according to Baker Hughes.
Money managers raised their net long US crude futures and options positions in the week to 14 Jul’20, raising its combined futures and options position by 614 contracts to total 369,762, the US CFTC said on Friday.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 608,559 (+4,316 DoD) yesterday, with the total number of confirmed infections at 14,634,732 (+220,073 DoD). (Click here for details).
The United States reported at least 75,000 new COVID-19 cases on Thursday, a daily record. Spain and Australia reported their steepest daily jumps in more than two months, while cases continued to soar in India and Brazil.
Naphtha
Asia’s naphtha crack extended losses on Friday, falling to a one-month low of $63.23 a tonne as some feedstock demand continues to be replaced with LPG.
The August crack is steady at -$ 0.90 /bbl
Gasoline
Asia’s gasoline crack also weakened, falling to a three-session low of $1.37 a barrel premium to Brent as ample stocks and sluggish demand weighed.
Indian state refiners’ petrol and diesel sales declined in the first half of Jul’20, with petrol sales falling 6.7% MoM to 880 KT and diesel sales dropping 18% MoM to 2.2 MMT, as a renewed lockdown in some areas and rising retail prices hit demand.
The August crack is lower at $2.25 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian refining margins for 10 ppm gasoil rose on Friday, posting a weekly gain on tightening supplies as some regional refiners have cut run rates to combat fragile demand recovery in the wake of a resurgence in coronavirus infections.
Average refinery run rates in Japan have slipped in the last two weeks, data from Petroleum Association of Japan (PAJ) showed, while market watchers said some refiners in South Korea and Taiwan are also running at lower rates.
Middle distillate inventories in Singapore have dropped to 13.4 million barrels this week, the lowest level in over three months. India’s gasoil exports this month are expected to close at about 2 million tonnes, up from 1.8 million tonnes in June, while July gasoil exports from China are expected to be higher than last month’s 856,000 tonnes.
Cash premiums for 10-ppm gasoil were at 76 cents a barrel to Singapore quotes on Friday, down from 81 cents a day earlier.
The August crack for 500 ppm Gasoil is steady at $5.75 /bbl with the 10 ppm crack at $ 6.55 / bbl. The regrade is at -$ 3.75 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for cargoes of Asia’s 380-cst HSFO fell to their lowest level in over a week on Friday, as deal values and volumes cooled in the Singapore trading window.
Cash premiums for 380-cst HSFO cargoes to 94 cents a tonne to Singapore quotes, down from the $1.19 per tonne premium hit in the previous session and its lowest since July 7.
Physical cargo deal volumes fell to 40 KT on Friday, the lowest since the start of the month, when the 380-cst HSFO cargo buying frenzy kicked off.
The August crack for 180 cst FO is lower at – $2.75 /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 action 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.