Oil prices hit their highest level in more than four months on Tuesday with a boost from a European Union stimulus deal.
Brent crude settled up $1.04 at $44.32 per barrel, while WTI rose $1.15 to $41.96 a barrel.
Oil was buoyed by an agreement among European Union leaders on a 750 billion-euro ($859 billion) fund to prop up coronavirus-hit economies. The EU deal allows the European Commission to raise billions of euros on capital markets on behalf of all 27 states, an unprecedented act of solidarity in almost seven decades of European integration.
World shares and the euro also hit their highest levels in several months. The dollar, in which most oil contracts are priced, fell to its lowest since March against a basket of currencies.
Oil prices were supported by promising coronavirus vaccine data released on Monday, though a vaccine remained months away at best. Countries including the United States and India are reporting record numbers of coronavirus infections and others such as Spain and Australia are battling new outbreaks.
Iraq’s crude oil exports have increased so far in Jul’20, averaging 2.70 MB/D, unchanged from Jun’20, suggesting the country is still undershooting its pledge in an OPEC-led supply cut deal.
Prices pared gains in post-settlement trade after the API reported U.S. crude inventories grew last week by 7.5 million barrels compared with expectations for a draw of 1.9 million barrels.
At a global level, the death toll from the COVID-19 virus rose to 618,494 (+5,678 DoD) yesterday, with the total number of confirmed infections at 15,084,943 (+239,093 DoD). (Click here for details).
Asia’s naphtha crack recovered to a four-session high of $72.95 a tonne on Tuesday as buyers came forward to buy cargoes for September.
Fundamentals were seen weaker since last week due to availability of alternative liquefied petroleum gas (LPG) feedstock. Maintenance and LPG have offset the falling volumes of East-bound cargoes as a result.
Total naphtha flows into Asia for July are seen at 5.4-5.5 million tonnes so far, down from June’s volumes of about 6 million tonnes due to a fall in Western arbitrage supplies.
The August crack is higher at -$ 0.15 /bbl
Asia’s gasoline crack tumbled nearly 16% to 96 cents a barrel premium to Brent crude, lowest since June 29 as ample supplies persisted.
New waves of infections across countries that have eased lockdown measures would potentially encourage people to stay indoors as much as they can.
Countries from the United States to India are posting record numbers of infections, while some nations such as Spain and Australia are battling new outbreaks.
The August crack is steady at $2.30 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asian refining margins for 10 ppm gasoil climbed to their strongest in more than a month on Tuesday, while cash premiums for the transportation fuel inched higher, thanks to a stronger deal in the physical market.
Refining margins or cracks for gasoil with 10 ppm sulphur content rose 60 cents to $7.22 a barrel over Dubai crude during Asian trading hours, the highest level since June 18.
Diesel demand typically takes a hit during monsoon months in some parts of the region as heavy rainfall and floods curtail demand for the transportation fuel.
Large parts of China are currently reeling from the worst floods in decades, while intense rain and floods have swamped large parts of India’s densely populated eastern states.
Cash premiums for 10 ppm gasoil were at 70 cents a barrel to Singapore quotes on Tuesday, up 1 cent from a day earlier.
The August crack for 500 ppm Gasoil is higher at $6.30 /bbl with the 10 ppm crack at $ 7.15 / bbl. The regrade is at -$ 3.80 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s cash differential for cargoes of 0.5% VLSFO flipped back to a narrow premium on Tuesday, lifted by higher deal values in the Singapore trading window despite ample supplies of the fuel in the Singapore hub.
The VLSFO cash differential rose to 23 cents per tonne premium to Singapore VLSFO quotes, up from a discount of 92 cents per tonne in the previous session and its highest since July 7.
The front-month VLSFO time spread held steady at minus $1.25 a tonne to Singapore quotes, unchanged from yesterday’s five month high.
The August crack for 180 cst FO is lower at – $3.90 /bbl with the visco spread at $0.75 /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.