Crude Oil
Oil prices ended Monday slightly higher as a flurry of announcements about a potential COVID-19 vaccine cheered traders.
Brent crude settled up 14 cents at $43.28 per barrel, while WTI rose 22 cents to $40.81 a barrel.
Prices found support after three groups said their potential vaccines showed promising results. An experimental coronavirus vaccine being developed by AstraZeneca and Britain’s University of Oxford was safe and produced an immune response in early-stage clinical trials, keeping alive the hope it could be in use by the end of the year. More than 150 possible vaccines are in various stages of development with U.S. drugmaker Pfizer and China’s CanSino Biologics also reporting positive responses for their candidates on Monday.
EU leaders appeared close to agreement on a massive stimulus plan for their coronavirus-blighted economies late on Monday after the chairman of their fractious four-day summit presented a new proposal to bridge gaps between them.
Rising tension between China and the United States has however put pressure on prices. China’s embassy in Myanmar on Sunday accused the United States of “outrageously smearing” the country and driving a wedge between it and its Southeast Asian neighbours over the contested South China Sea and Hong Kong.
Money managers purchased 24 MB of oil futures and options contracts in the week ending on 14 Jul’20. Purchases reversed sales of 21 MB the previous week, extending a slight rise, after a much stronger upward trend over the previous two months.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 612,842 (+4,046 DoD) yesterday, with the total number of confirmed infections at 14,845,684 (+205,348 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 hit a five-week low of $63.03 a tonne.
Japan imported 1.24 million tonnes of naphtha in June, highest since March, data from Ministry of Economy, Trade and Industry showed. This brought Japan’s monthly average naphtha imports between January and June to 1.2 million tonnes, up from a monthly average of 1.1 million tonnes for the same period in 2019.
The August crack is higher at -$ 0.50 /bbl
Gasoline
Asia’s gasoline premium to Brent crude was at a four-session low of $1.14 a barrel due to ample supplies due to weak demand despite a key refinery having cut runs.
The August crack is higher at $2.35 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for jet fuel were at a discount of 37 cents a barrel to Singapore quotes on Monday, compared with a 36-cent discount on Friday.
The front-month time spread for the aviation fuel in Singapore widened its contango structure to trade at a discount of 48 cents per barrel.
Global flying capacity has risen 3.5% YoY for the week starting 20 Jul’20 to just under 56 million seats, OAG said. Load factors were just 12% for Singapore Airlines in Jun’20, and US TA checkpoint data showed load factors at around 25% of last year’s levels.
However, the fresh wave of coronavirus infections may act as a damper on future growth.
The August crack for 500 ppm Gasoil is higher at $6.05 /bbl with the 10 ppm crack at $ 6.85 / bbl. The regrade is at -$ 3.60 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month contango structure for Asia’s 0.5% VLSFO was at its narrowest in nearly five months as suppliers seek to clear inventories. The narrowing contango structure also came amid thin trading volumes.
The Aug/Sept VLSFO time spread firmed to minus $1.25 a tonne on Monday, up from a $2.25 per tonne discount in the previous session and its narrowest since March 3. The front-month time spread was at a $4.50 per tonne discount at the start of the month.
The August crack for 180 cst FO is lower at – $3.10 /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.