Crude Oil
Oil prices rose about 2% in a volatile session on Thursday, buoyed by signs of a marginal improvement in the U.S. economy and a tepid rise in fuel demand, but price gains were limited by rising cases of COVID-19 in some U.S. states.
Brent crude settled at $41.05 a barrel, up 74 cents. WTI crude futures settled at $38.72 a barrel, up 71 cents.
Oil prices fell early, then found support as data showed fewer Americans filed for unemployment benefits last week and orders for key capital goods rebounded in May.
To kick-start the world economy devastated by coronavirus, central banks have unleashed trillions of dollars in stimulus. New infections have surged in U.S. states including Oklahoma, Texas and Florida. Australia posted its biggest daily rise in two months.
After US crude futures took an historic plunge into negative territory in Apr’20, Platts and Argus said on Thursday they will start new benchmarks reflecting the price of Gulf Coast-traded crude on tankers, a break from the old landlocked system.
The number of Americans filing claims for unemployment benefits fell to 1.48M last week as a second wave of layoffs partially offset hiring by businesses reopening, suggesting the labor market could take years to recover from the COVID-19 pandemic.
The value of Saudi Arabia’s oil exports dropped by 65.4% YoY in Apr’20, a fall of about $12 billion, official data showed on Thursday. The country could see its economy shrink by 6.8% this year, the IMF said this week.
China has deployed large numbers of troops and weapons along a disputed Himalayan border in violation of bilateral agreements, India’s foreign ministry said on Thursday, accusing Beijing of escalating tensions and triggering a deadly clash last week.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 490,989 (+5,179 DoD) yesterday, with the total number of confirmed infections at 9,702,386 (+179,718 DoD). (Click here for details).
The COVID-19 pandemic is subsiding in Europe, but getting worse globally with the number of infections expected to reach 10 million next week and the number of deaths 500,000, the head of the WHO said.
Naphtha
Asia’s naphtha crack fell to a one-week low of $72.23 a tonne on Thursday, but the intermonth spread at a 4-1/2 month high of $14.25 a tonne reflected strong fundamentals.
The July crack has returned to negative territory with a value of -$0.20 / bbl today.
Gasoline
Asia’s gasoline crack was at a 1-1/2 week low of $2.58 a barrel premium over Brent crude, down nearly 45% from the previous day, dragged down by a resurgence of new infections across the globe.
Singapore’s onshore light distillates inventories 292 KB, to reach a four-week low of 14.95 million barrels in the week to June 24, data from Enterprise Singapore showed. But this was still 18.1% higher than a year ago.
The July crack is lower at $2.55 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel narrowed for a second consecutive session to 76 cents a barrel to Singapore quotes, compared with a discount of 79 cents a day earlier. Increasing fears about a resurgence of the coronavirus outbreak, however, kept a lid on further gains for the differentials.
The global aviation sector is poised to see further respite in the near term as research showed that as of 15 Jun’20, 22% or 48 out of 217 destinations worldwide have started to ease travel restrictions, according to the UN WTO.
Singapore onshore middle distillate stocks slipped 0.2% to 13.9 million barrels in the week ended June 24, Enterprise Singapore data showed. The weekly Singapore middle distillate inventories have averaged at 12.7 million barrels so far in 2020. This week’s stocks were 23% higher year-on-year.
The July crack for 500 ppm Gasoil is lower at $5.20 /bbl with the 10 ppm crack at $ 6.05 / bbl. The regrade is at -$ 3.60 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst HSFO cash discount was at its narrowest since June 15 on Thursday, lifted by deal activity in the Singapore pricing window and tightening supplies of the fuel. The cash discount was at minus $4.34 a tonne to Singapore quotes, up from minus $5.89 a tonne in the previous session.
In contrast, cash discounts for 0.5% VLSFO slipped to a one-week low amid limited demand for cargoes of the fuel. Buying interest for VLSFO cargoes in the window has largely disappeared since mid-May with only one reported trade over the past five weeks.
Singapore’s residual fuel oil inventories slipped 0.1% in the week to June 24, inching away from a more than three-year high hit the week before, official data showed on Thursday, as limited bunkers and export demand helped maintain elevated supplies. Onshore fuel oil stocks slipped 34 KB to 26.596 million barrels in the week ended Wednesday, according to the Enterprise Singapore data. Residual fuel stocks were 16% higher from a year-earlier period.
The July crack for 180 cst FO is lower at – $3.40 /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.