Crude Oil
Oil prices edged higher on Wednesday, supported by U.S. government data that showed crude and fuel inventories dropped last week.
Brent crude rose 5 cents to settle at $41.77 a barrel. The WTI future for November settled up 13 cents to $39.93.
While Brent crude fell 15 cents to settle at $43.15 a barrel, while WTI crude rose 14 cents to settle at $41.11 per barrel.
U.S. business activity nudged down in September, suggesting a loss of momentum in the economy as the third quarter draws to a close and the pandemic lingers.
Global oil demand will return to pre-pandemic levels in 2H’21, the Gazprom Neft CEO said yesterday. His forecast was more pessimistic than the energy ministry’s, which expects a full recovery in oil demand in the Q2’21 of 2021.
OPEC faces a new challenge as Libya, an OPEC member that is exempt from the supply cut, is aiming to boost supply after an easing of the country’s conflict.
DOE data
U.S. crude, gasoline and distillate inventories all fell last week, Energy Information Administration data showed. While crude inventories fell less than expected; gasoline stocks dropped more than expected and distillate stockpiles posted a surprise drawdown.
The draw in diesel stocks was due to a healthy rise in demand up to 3.96 mbpd, a number not seen since March. The crude draw is primarily due to an increase in exports coupled with a reduction in production, probably induced by shutting down of capacity for a tropical storm.
As usual, the material balance statement shows differences, an exaggeration of draw down in gasoline and an understatement of draw down in diesel stocks.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 981,288 (+6,333 DoD) yesterday. After several consecutive days of rise, the total number of active cases rose by around 27,000 to 7.43 million. (Click here for details).
Naphtha
Asia’s naphtha crack edged up to $86.38 a tonne.
The October crack is lower at $ 2.25 / bbl.
Gasoline
Asia’s gasoline premium to Brent rose 7.7% to a two-session high of $4.45 a barrel.
The October crack is lower at $ 4.35 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel were at $1.15 a barrel to Singapore quotes on Wednesday, compared with $1.17 per barrel a day earlier. The October/November time spread for jet fuel traded at a discount of 67 cents a barrel on Wednesday.
Middle-distillate inventories in the Fujairah Oil Industry Zone rose 24.1% to 4.7 million barrels in the week ended Sept. 21, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 3.9 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019.
China’s diesel exports in Aug’20 doubled the levels in Jul’20 to 1.09 MMT, customs data showed on Wednesday, as refiners shipped fuel overseas despite poor export margins to reduce brimming domestic oil product inventories.
The October crack for 500 ppm Gasoil is higher at $1.90 /bbl with the 10 ppm crack at $ 2.40 / bbl. The regrade is at -$ 2.55 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Term ex-wharf premiums for 0.5% VLSFO bunkers for October were concluded higher compared with September.
Meanwhile, fuel oil inventories in the Fujairah bunkering and storage hub plummeted 20% to a 13-month low in the week ended Sept. 21. Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 790 KB from the previous week to 12.552 million barrels their lowest since the week to March 9, data via S&P Global Platts showed. Fujairah’s fuel oil inventories were 3% lower than year-earlier levels, the lowest year-on-year levels since August last year.
The October crack for 180 cst FO is lower at – $3.10 /bbl with the visco spread at $0.90 /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.