Crude Oil
Prices ended mixed on Tuesday. Brent crude settled 16 cents lower at $34.65 /bbl. The expiring July WTI future settled 31 cents higher at $ 31.96 /bbl. The August contract ended 68 cents higher at $32.50 /bbl.
U.S. crude prices were bolstered by statement from U.S. Treasury Secretary Steven Mnuchin who said he supported extending certain measures intended to bolster the economy, while Brent ended lower on concerns that output cuts might not be sufficient.
Meanwhile, the impact of countries emerging from lockdowns is increasingly visible. Traffic activity in Europe’s five biggest economies rose to more than 60% of pre-pandemic levels last week, according to Apple data, as economic and social activity continues to recover in line with the easing of national lockdowns.
api changes
The API Industry group reported a draw of 4.8 million barrels, along with a drop in gasoline inventories as well. Distillate stocks still rose, reflecting weaker demand for diesel.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 324,554 (+4,589 DoD) yesterday, with the total number of confirmed infections at 4,982,937 (+94,813 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack remained in choppy waters, falling to a two-session low of $26.68 a tonne.
The crack has been on a roller-coastal ride since Thursday, when the value plunged 113% into the negative zone followed by a 1,000% spike the next day, as the market appeared divided on fundamentals.
Asia will receive a record high volume of 3 million tonnes of naphtha this month from the West including Europe and the United States, with June volumes seen over 2.2 million tonnes.
The June crack is lower at -$2.95 / bbl.
Gasoline
Asia’s gasoline crack turned positive for the first time in nearly two months on Tuesday, hitting a 4 cents premium to Brent oil compared to discount of 39 cents, as demand is seen gradually recovering with lockdowns easing in parts of the world.
Britain’s fuel demand, for instance, has improved recently, although still weak compared to pre-virus days. A recovery in India’s fuel demand has also gathered momentum in the first half of May versus April.
The June crack is higher at $1.30 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10 ppm gasoil narrowed to 95 cents per barrel to Singapore quotes on Tuesday, as against a discount of $1.06 per barrel on Monday.
The gasoil EFS has widened to about minus $15 a tonne this week from around minus $2 per tonne two weeks ago.
A record volume of diesel, however, is set to reach Europe from the East in May after lockdown measures due to coronavirus left refiners in Asia and the Middle East with huge excess volumes of fuel. Over 3 million tonnes of diesel are set to arrive in Europe in May, up from a previous record of 2.8 million tonnes in June last year.
The sharp rise in fuel exports from Asia comes after China’s refineries cranked up operations in April after lockdown measures were eased.
Cash discounts for jet fuel were at $2.25 a barrel to Singapore quotes on Tuesday, compared with a Monday’s discount of $2.09 a barrel.
Refining margins for jet fuel flipped to a premium of $1.83 a barrel over Dubai crude on Tuesday, compared with a discount of 87 cents per barrel on Monday
China’s kerosene output in April plunged 43% from last year to 2.42 million tonnes, while gasoil output was steady at 13.39 million tonnes, up by 1% from last year.
The June crack for 500 ppm Gasoil has dropped to $4.50 /bbl with the 10 ppm crack at $ 5.35 / bbl. The regrade is at -$ 1.05 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO slipped on Tuesday, with cash discounts and time spreads falling to near two-week lows.
Cash discounts were at their widest in nearly two weeks on Tuesday at minus $7.88 a tonne against Singapore quotes, down 62 cents from Monday.
Similarly, the from-month time spread fell to a discount of $6.25 a tonne, its lowest since May 8.
China’s fuel oil output jumped to 3.09 million tonnes in April, up 68% from last year, according to China’s statistics bureau.
Late last month, China released its first-ever quotas to export VLSFO with total volumes of 10 million tonnes for this year. The quotas, which came in the wake of Beijing’s policy in January to offer tax sweeteners to boost local production of the fuel, paves the way for Chinese refiners to almost fully cover the demand from its coastal bonded marine fuel market of 12-14 million tonnes annually.
The June crack for 180 cst FO is higher at – $1.95 /bbl with the visco spread at $1.25 /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.
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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.