Wednesday saw crude prices drop with a global markets selloff triggered by China’s crypto-crackdown handing oil its worst day in three weeks. An explosion of coronavirus cases in Asia — particularly in countries that seem to have beaten the pandemic, such as Singapore, Taiwan and Vietnam — weighed heavily on energy market sentiment too as questions rose on the mobility of those economies going ahead.
Brent futures settled down $2.03, or almost 3%, at $66.66 per barrel. Brent slid to a 3-week low of $65.30 intraday.
WTI crude futures settled down $2.13, or 3.3%, at $63.36 per barrel. It earlier hit a 3-week low of $61.98.
Asian energy officials on Wednesday disputed the IEA’s call for no new oil, natural gas and coal investments for the world to be able to reach net-zero carbon emissions by 2050, viewing that approach as too narrow.
The Biden administration will waive sanctions on the company behind Russia’s Nord Stream 2 pipeline to Europe and its chief executive, with the US State Department set to deliver its report as early as Wednesday.
The DOE report looked bullish if looked at in the light of market expectations. Adding support to the cause of oil prices were the demand figures for gasoline and distillates, at a healthy 9.2 mbpd and 4.0 mbpd respectively. These are close to pre Covid levels and augur well for the future.
Also, a look at our material balance statement above, the data seems to suggest crude stocks would have drawn rather than built. However, the product draws seem to be slightly exaggerated.
At a global level, the death toll from the COVID-19 virus rose to 3.43 Million (+13,185 DoD) yesterday. The total number of active cases rose fell by around 120,000 DoD to 16.33 million. (Click here for details).
Asia’s naphtha crack slipped to $93.45 per tonne from $93.93 per tonne a day earlier.
The June crack has is higher at $ 0.30 /bbl
Asian refining margins for gasoline rose on Wednesday as prices of raw material crude fell, but traders remain worried renewed lockdowns in several markets would dampen demand recovery in the region.
Asia’s gasoline crack rose to $6.16 per barrel from $5.49 per barrel on Tuesday. The cracks, however, have shed about 10% in the last two weeks.
Light-distillate inventories in the Fujairah Oil Industry Zone jumped 20.1% to 6.1 million barrels in the week to May 17, data via S&P Global Platts showed.
The June crack is higher at $8.25 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for 10ppm gasoil dropped 4 cents to $0.16 per barrel on Wednesday.
Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 8.6% to 3.7 million barrels in the week ended May 17, data via S&P Global Platts showed.
Asia’s cash differentials for jet fuel flipped back into discounts on Wednesday, after staying in positive territory for two weeks, as fresh waves of coronavirus infections in several regional markets weighed on aviation demand.
Cash differentials for jet fuel plunged to a discount of 3 cents per barrel to Singapore quotes, compared with a premium of 5 cents a barrel on Tuesday.
The Asian jet fuel market, however, is expected to benefit from arbitrage shipments to the West, where aviation demand is recovering faster, according to trade sources.
The June crack for 500 ppm Gasoil is lower at $6.95 /bbl with the 10 ppm crack at $ 8.75 /bbl. The regrade is at -$ 0.55 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market complex edged higher on Wednesday, halting sharp declines earlier in the week that sent prices to multi-month lows in the previous session.
VLSFO cash differential improved to minus $2.50 a tonne to Singapore quotes from a 9-1/2-month low of minus $2.83 a tonne on Tuesday.
Similarly, the front-month time-spread rose to minus $2.25 a tonne on Wednesday from a 10-month low of minus $3.25 a tonne in the previous session, while the front-month crack against Dubai crude climbed to $10.02 a barrel from a five-month low of $9.63 a barrel on Tuesday.
Fujairah Oil Industry Zone inventories for heavy distillates and residues rose by 535,000 barrels, or about 84,000 tonnes, to 13.05 million barrels, or 2.14 million tonnes, data via S&P Global Platts showed.
The June crack for 180 cst FO is higher at -$7.05 /bbl with the visco spread at $0.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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.
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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.