Crude Oil
Oil prices rose on Monday as storms headed for the Gulf of Mexico shut more than half of the region’s offshore production.
Brent crude rose 78 cents to settle at $45.13 a barrel, while WTI rose 28 cents to $42.62 per barrel.
Energy companies moved to cut production at US Gulf Coast oil refineries on Monday, shutting more than 1.5 MB/D, nearly 82% of the area’s offshore crude oil output, and 14% of the nation’s total output, as back-to-back storms took aim at the coast.
Tropical Storm reached the coast Monday, and Laura was expected to accelerate to a hurricane and hit by midweek.
U.S. gasoline futures jumped roughly 7% as refiners idled plants as a precaution.
China said on Tuesday it agreed with the US to continue pushing forward the implementation of the bilateral Phase 1 trade deal reached earlier this year during a call between the two countries’ top trade negotiators.
Hedge funds continued to switch their focus from crude oil to refined fuels last week, betting refinery margins are too low and will have to rise even as signals oil prices remain conflicting, purchasing the equivalent of 12 MB in the week to 18 Aug’20.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 816,574 (+4,350 DoD) yesterday. The total number of active cases fell by around 55,000 to 6,635,113. (Click here for details).
Naphtha
Asia’s naphtha crack rose on Monday to hit a near one-month high of $73.05 a tonne on firm demand.
East-bound cargoes arriving next month from Europe, the Mediterranean and the United States were not as high as expected.
The September crack is higher at $1.50 /bbl.
Gasoline
Asia’s gasoline crack eased to a two-session low of $2.99 a barrel. China shipped out 1.12 million tonnes of gasoline in July. The Chinese July exports were 47% higher versus June.
The September crack is higher at $4.10 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel were at 37 cents a barrel to Singapore quotes on Monday, compared with a discount of 50 cents on Friday.
Asian refining margins for jet fuel edged higher on Monday, buoyed by hopes the aviation fuel market would likely find pockets of support in coming months as countries gradually ease border and travel restrictions.
Singapore said on Friday it would reopen its borders to visitors from New Zealand and Brunei from next month, in the city-state’s first steps towards resuming leisure travel since it sealed its borders in March to control COVID-19 outbreaks.
However, global flying capacity moved 1%, or 700,000 seats, lower to 57.4 million seats in the week commencing 21 Aug’20, the third consecutive week of global capacity falling back, according to OAG.
China’s diesel exports fell for a fourth straight month in July, hitting their lowest level in five years, as tepid demand overseas due to the COVID-19 pandemic forced Chinese refiners to focus on domestic consumers. China shipped out only 550 KT of diesel, about half of 1.04 million tonnes in June and a third of 1.58 million tonnes in July 2019, data from the General Administration of Customs showed on Sunday night. Jet kerosene exports were down 77% from a year earlier to 320 KT last month..
The September crack for 500 ppm Gasoil is higher at $4.45 /bbl with the 10 ppm crack at $ 5.25 / bbl. The regrade is at -$ 4.95 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO market fell on Monday. VLSFO cash differential fell to a near two-month low of minus $3.47 per tonne to Singapore quotes, while the front-month time spread slipped to a near six-week low of minus $3 per tonne.
The September crack for 180 cst FO is lower at – $1.70 /bbl with the visco spread at $0.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity 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.