Oil prices steadied on Wednesday, pressured by worries about the demand outlook during the coronavirus pandemic but buoyed as U.S. producers shut output in the Gulf of Mexico ahead of Hurricane Laura.
Brent crude fell 22 cents to settle at $45.64 a barrel, while WTI rose 4 cents to $43.39 per barrel.
Laura intensified into a strong Category 4 hurricane on Wednesday as it raced over evacuated oil production platforms in the US Gulf of Mexico and took aim at the energy industry’s refining hub along the Texas/Louisiana coast.. Nine oil-processing plants that convert nearly 2.9 million barrels per day of oil into fuel, and account for about 15% of U.S. processing, were shutting down. Oil producers on Tuesday had evacuated 310 offshore oil facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production.
Significant volumes of Nigerian crude are heading into land-based storage in South Africa for the first time since prices collapsed in Apr’20, marking a new phase for the market with holders forced into the move because of the lack of demand.
Crude stocks fell primrily due to a huge increase in the volume of exports to nearly 3.4 mbpd, the most since February 2019. Refining runs increased to a several week high of 82%, a level not seen since the end of March, 2020.
Gasoline demand increased massively to cross 9 mbpd for the first time since 13 March, 2020. While distillate demand also increased by 700 KB to 3.96 mbpd, also a high since 13 March, most of this was taken care of by an increase in production and a reduction in exports
The material balance statement continues to show anomalies. We are just placing it above for reference.
At a global level, the death toll from the COVID-19 virus rose to 828,914 (+6,346 DoD) yesterday. The total number of active cases fell was almost unchanged at 6,627,588. (Click here for details).
Asia’s naphtha crack eased 2% to a two-session low of $72.48 a tonne while gasoline margin hit a five-session low of $2.53 a barrel, weighed down by firm raw material Brent crude price.
Demand for naphtha was strong as a string of buyers were replenishing inventories.
Bahrain sold a naphtha cargo for late August loading late last week for end-August loading at premiums of $6 to $8 a tonne to Middle East quotes on a free-on-board (FOB) basis. This brings the total exports for August from Bahrain to around 150,000 tonnes, highest monthly volume for this year.
The September crack is higher at $1.20 /bbl.
No fresh news on the gasoline markets.
The September crack is lower at $3.90 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for jet fuel were at 50 cents a barrel to Singapore quotes on Wednesday, compared with the 43-cent discount on Tuesday.
Refining margins for jet fuel were at a discount of 75 cents a barrel to Dubai crude during Asian trading hours, the lowest since May 29. They were at minus 54 cents a day earlier.
Middle-distillate inventories in the Fujairah Oil Industry Zone climbed 22% to 4.1 million barrels in the week ended Aug. 24, 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 September crack for 500 ppm Gasoil is lower at $4.05 /bbl with the 10 ppm crack at $ 4.85 / bbl. The regrade is at -$ 5.05 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month crack for 0.5% VLSFO slipped on Wednesday, weighed by firmer crude prices and expectations of ample arbitrage supplies in September.
The front-month VLSFO crack dipped to $7.63 per barrel against Dubai crude during Asian trade, down from $7.86 per barrel on Tuesday.
Fuel oil stocks held in the Fujairah oil hub jumped 13% to a six-week high in the week to Aug. 24. Fujairah inventories for heavy distillates and residues jumped by 1.735 million barrels from the previous week to 15.486 million barrels, data via S&P Global Platts showed. The inventories were also 47% higher than year-ago levels.
The September crack for 180 cst FO is higher at – $1.55 /bbl with the visco spread at $0.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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.
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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.