Oil prices rose more than 1% on Wednesday, extending gains for a third session, after U.S. government data showed that fuel demand climbed to its highest since the start of the COVID-19 pandemic.
Brent Crude futures rose $1.20, or 1.7%, to settle at $72.25 a barrel. U.S. West Texas Intermediate (WTI) crude gained 82 cents, or 1.2%, to end at $68.36 a barrel.
However, the rally of nearly 10% on the week, which overwrote all of last week’s 9% slump, appeared to be reaching exhaustion with U.S. crude prices edging toward the $70 resistance, said analysts. This morning Brent crude was down 45 cents and WTI crude was down 55.
“The headline draw was welcome news but a steep drop in crude exports and lacklustre jet fuel demand prevented prices from extending gains,” Edward Moya, senior analyst at OANDA, said in a note.
Aramco Trading Company (ATC) will be participating in S&P Global Platts’ price assessment process for crude cargoes in Asia, the price reporting agency said on Wednesday. Some industry players have raised concerns about a potential conflict of interest as ATC is wholly-owned by Saudi Aramco and the Platts Dubai crude market structure is used by the world’s top oil exporter to set monthly prices for millions of barrels of Saudi crude sold in Asia.
While refining rates increased marginally, crude exports dropped by over 600 kbpd which should have led to an overall build in crude stocks as per our material balance report. Similarly, gasoline and distillate stocks also show anomalies.
The rebound in gasoline demand would be supportive for crude prices going forward.
At a global level, the death toll from the COVID-19 virus rose to 4.48 Million (+11,174 DoD) yesterday. The total number of active cases rose by 150,000 DoD to 18.20 million. (Click here for details).
Asia’s naphtha crack inched lower and the prompt inter-month spread narrowed to $1.50 a tonne in contango after Equinor bought a second-half October loading cargo.
Asia’s naphtha crack was at $115.53 a tonne, down from 116.63 in the previous session.
The September crack is higher at $4.00 / bbl.
Asia’s gasoline crack edged higher on Wednesday for a second straight session as a decline in the U.S. inventories strengthened demand expectations.
The crack rose to $7.75 a barrel from $7.50 on Tuesday.
Light distillate inventories in Fujairah rose marginally to 5.63 million barrels in the week ended 23rd August.
The September crack is higher at $10.05 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for gasoil with 10 ppm sulphur content slipped to a premium of 3 cents per barrel to Singapore quotes on Wednesday. They were at a premium of 5 cents on the previous day.
Middle-distillate inventories in the Fujairah Oil Industry Zone slipped 2.1% to a two-week low of 3.96 million barrels in the week ended Aug. 23, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 3.8 million barrels this year, compared with 4.2 million barrels in 2020, Reuters calculations showed.
Cash differentials for jet fuel were at a discount of 2 cents per barrel to Singapore quotes, compared with a premium of 4 cents per barrel on Tuesday. The Sept/Oct time spread for jet fuel in Singapore traded at minus 4 cents per barrel on Wednesday, as against minus 3 cents per barrel a day earlier.
Asia’s cash differentials for jet fuel flipped to a discount for the first time in more than a week on Wednesday, weighed down by muted buying interests in the physical market, while the front-month spread for the aviation fuel widened its contango structure.
Refining margins for jet fuel rose to $6.20 per barrel over Dubai crude during Asian trade, Refinitiv data showed. The cracks, which have averaged $5.79 per barrel in the last two months, were more than 40% weaker compared with their five-year seasonal average for this time of the year.
The September crack for 500 ppm Gasoil is higher at $7.35 /bbl with the 10 ppm crack at $ 8.85 /bbl. The regrade is at -$ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash premiums for cargoes of 0.5% very low-sulphur fuel oil (VLSFO) and 380-cst high-sulphur fuel oil (HSFO) retreated on Wednesday, following sharp gains earlier in the week that were fuelled by concerns of tightening supplies and strong demand from refiners and utilities.
380-cst HSFO cash premiums for cargoes of the fuel fell to $9.61 a tonne to Singapore quotes, down from a near seven-month high of $10.17 on Tuesday. Cash differentials for VLSFO cargoes slipped to $4.41 a tonne, down 4 cents from a more than 1-1/2 year high in the previous session.
By contrast, 180-cst HSFO cash premiums extended gains to a fresh 10-month high of $7.79 a tonne to Singapore quotes, from $7.42 in the previous session.
Fuel oil inventories in the Fujairah bunkering and storage hub fell 11% to a five-month low in the week ended Aug. 23 and were down by 44% from the same period last year, data released on Wednesday showed. Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 1.08 million barrels, or about 170,000 tonnes, to 8.69 million barrels, or 1.37 million tonnes, data via S&P Global Platts showed.
The September crack for 180 cst FO is higher at -$3.40 /bbl with the visco spread at $1.75 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No fresh activity for today.
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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.