Crude Oil
Oil was up 2% on Monday on tighter crude supplies from major producers and as coronavirus lockdowns kept easing despite a record rise in cases globally.
Brent crude settled at $43.08 a barrel, up 89 cents. The WTI crude contract for August , the day’s more-active contract, settled at $40.73 a barrel, rising 90 cents.
Ballooning virus cases in the United States and elsewhere kept prices from moving higher. South Korea said on Monday for the first time that it was in the midst of a second wave of the coronavirus. The World Health Organization reported a record rise in global cases on Sunday, with the biggest gains from North and South America.
Relations between the US and China seem to be getting more fragile. The White House trade adviser said on Monday the trade deal with China is “over,” and he linked the breakdown in part to Washington’s anger over Beijing’s not sounding the alarm earlier about the coronavirus outbreak. The US also said on Monday that it will start treating four major Chinese media outlets as foreign embassies, alleging they are mouthpieces for Beijing, in a move that is likely to further sour already fraught ties between the world’s top two economies.
Indian crude oil processing gathered momentum in May’20, rising by some 7.3% from Apr’20 to around 3.87 MB/D as an easing of restrictions on transport and industrial activity boosted fuel demand.
Hedge funds started to realise some profits and anticipate a pull back in crude prices, especially in the US, after a strong rally saw prices double in less than two months, selling 16 MB in the week to 16 Jun’20.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 473,484 (+3,880 DoD) yesterday, with the total number of confirmed infections at 9,180,875(+138,975 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack rose for a third consecutive session and hit a near 4-1/2-month high of $73.93 a tonne, supported by firm demand.
The July crack is higher at $0.30 / bbl.
Gasoline
Gasoline refining margins in Asia also rose for the sixth straight session to reach a near 3-1/2-month high of $4.59 a barrel premium to Brent crude.
The July crack is lower at $4.90 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash discounts for jet fuel narrowed on Monday, as the front-month spread for the aviation fuel slimmed its contango, buoyed by an uptick in demand.
Cash discounts for jet fuel narrowed to 64 cents a barrel to Singapore quotes on Monday, compared with a discount of 70 cents on Friday.
The July/August time-spread for jet fuel in Singapore traded at a discount of 45 cents per barrel on Monday, compared with 58 cents in the previous session.
Airlines have been increasing the number of flights especially on domestic routes as countries ease coronavirus-led containment measures. However, global flying capacity has fallen by 49,000 seats to 39.911 million seats for the week starting 22 Jun’20, according to aviation information provider OAG
Cash premiums for 10-ppm gasoil slipped to 75 cents a barrel to Singapore quotes on Monday, compared with a 90-cent premium at the end of last week.
The July crack for 500 ppm Gasoil is lower at $5.30 /bbl with the 10 ppm crack at $ 6.15 / bbl. The regrade is at -$ 2.65 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month 380-cst HSFO crack discount against Dubai crude was at its widest in three weeks on Monday, in line with rising crude oil prices. The July 380-cst HSFO crack fell to $4.55 a barrel below Dubai crude, down 35 cents from the previous session, and its widest discount since May 29.
China’s new LSFO futures contract made strong gains in its debut trade, rising as much as 16.7% on the Shanghai International Energy Exchange (INE). The front-month January contract , with a listing price of 2,368 yuan per tonne, later pared gains to close 9.8% higher at 2,599 yuan ($367.35) per tonne. The contract saw open interest of 24,859 lots and trading volumes of 130,439 lots.
The July crack for 180 cst FO is lower at – $3.25 /bbl with the visco spread at $1.30 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The Naphtha Dubai crack has strayed into positive territory after months of being down in the doldrums. We will lay a small hedge for July at the current levels of $0.30 / bbl. We will most probably have to let it settle. However, this is more than $ 2 /bbl more than we have seen for the past several months. Therefore, it may well be worth hedging a little at this level.
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.