Crude Oil
Oil prices tumbled over 5%, or more than $2 a barrel on Wednesday, after U.S. crude storage hit another record and coronavirus cases rebounded in countries like Germany and surged in heavily populated areas of the United States.
Brent crude settled at $40.31 a barrel, down $2.32. WTI crude futures settled at $38.01 a barrel, down $2.36.
The United States had its second-largest rise in infections since the pandemic began. Mounting infections there as well as in China, Latin America and India have unnerved investors and pressured oil prices.
A stronger U.S. dollar, which moves inversely with oil, and a slump in equities also weighed on prices.
The IMF said it now expects 2020 global output to shrink by 4.9%, compared with a 3.0% contraction predicted in Apr’20, when it used data available as widespread business lockdowns were just getting into full swing.
India’s oil imports in May hit the lowest since October 2011 as refiners with brimming crude inventories cut purchases. India’s IOC, the country’s top refiner, on Wednesday reported its first quarterly loss in more than four years in the March quarter, after a surge in inventory losses following a sharp fall in crude oil prices.
DOE data
U.S. crude oil inventories continued to report builds as 500 kbpd returned to production following shut down for cyclone outage. Export figures, however, have also grown which would suggest that crude inventories may well dip over the next several weeks.
Gasoline demand, at 8.6 mbpd, seems to be returning to close to normal levels which apparently has resulted in a draw in gasoline stocks. However, distillate stocks continue to build.
The material balance statement continues to be at strong odds with reported figures. However, the figures bear watching for analysis at some stage in time.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 483,959 (+5,071 DoD) yesterday, with the total number of confirmed infections at 9,519,482 (+172,383 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack rose for a fifth straight session to hit a fresh 4-1/2-month high of $83.18 a tonne on Wednesday, as persistent firm demand supported the value and drove spot prices to their highest since January..
The July crack has dropped to $0.25 / bbl.
Gasoline
No fresh news on the gasoline markets.
The July crack is lower at $3.35 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian refining profit margins for jet fuel slipped on Wednesday, despite weaker crude prices as a majority of international flights remain grounded due to the coronavirus-led restrictions and as China deals with a renewed outbreak in its capital city.
Cash discounts for jet fuel were at 79 cents a barrel to Singapore quotes on Wednesday, compared with a discount of 81 cents a day earlier.
Cash premiums for 10-ppm gasoil dropped to 51 cents a barrel to Singapore quotes on Wednesday, down from 67 cents per barrel in the previous session.
The front-month time spread for 10 ppm gasoil flipped into a contango for the first time in more than two weeks to trade at a discount of 32 cents a barrel, compared with a premium of 17 cents on Tuesday.
Middle-distillate inventories in Fujairah dropped 8.4% to 5 million barrels in the week ended June 22, 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.
The July crack for 500 ppm Gasoil is higher at $5.55 /bbl with the 10 ppm crack at $ 6.10 / bbl. The regrade is at -$ 3.30 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month 0.5% VLSFO crack against Dubai crude fell to a three-week low of $6.39 a barrel on Wednesday, as limited demand and ample supplies continued to weigh on market sentiment. The decline also came despite falling crude oil prices as record high inventories and worries about a second wave of the coronavirus pandemic outweighed support from a gradual reopening of global economies.
Fuel oil stocks held in Fujairah edged down for a second straight week, slipping 1% in the week to June 22. Fujairah inventories for heavy distillates and residues slipped by 189 KB from the previous week to 16.901 million barrels , data via S&P Global Platts showed. The inventories were 55% higher than year-earlier levels.
The July crack for 180 cst FO is lower at – $3.15 /bbl with the visco spread at $1.15 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action for 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.