Crude Oil
Oil futures tumbled on Wednesday after U.S. President Donald Trump said he was working on a strong response to China’s proposed security law in Hong Kong.
Brent fell $ 1.65 to $34.52 a barrel. WTI crude futures fell $1.54 to $32.81 a barrel.
Tensions between the United States and China continued to rise after China announced plans to impose new national security legislation on Hong Kong, prompting protests in the street. U.S. Secretary of State Mike Pompeo said he had certified that Hong Kong no longer warrants special treatment under U.S. law, a blow to its status as a major financial hub.
Gloomy forecasts over the economic impact of the pandemic also weighed on crude. Economists estimate another 2 million Americans filed initial applications for unemployment insurance last week. The U.S. Labor Department will report on Thursday.
The euro zone economy will probably shrink between 8% and 12% this year, European Central Bank President Christine Lagarde said, warning the outcome would be between medium and severe.
In another sign of weak fuel demand, Japan’s refineries operated at only 56.1% of capacity last week, the lowest since at least 2005.
api data
U.S. crude oil, gasoline and distillate stocks all rose, data from API showed on Wednesday. The Energy Information Administration will release its own inventory data Thursday at 11:00 EST.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 356,937 (+5,283 DoD) yesterday, with the total number of confirmed infections at 5,784,603 (+106,475 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack hit a fresh one-month high of $44.10 a tonne on Wednesday, as strong demand for the fuel persisted.
The June crack is lower at -$2.05 / bbl.
Gasoline
Asia’s gasoline crack hit a two-week low at a discount of $1.92 a barrel to Brent crude as supplies still outpaced demand
This is notwithstanding some recovery seen as countries around the world eased lockdown measures that were enforced to curb the spread of COVID-19.
China exported a record high of 1.9 million tonnes of gasoline in April, as Chinese refiners cranked up throughput.
The June crack is lower at -$1.00 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel were at 83 cents a barrel to Singapore quotes on Wednesday, the narrowest since March 19. They were at a discount of $1.29 per barrel a day earlier.
Cash discounts for 10 ppm gasoil narrowed to 54 cents per barrel to Singapore quotes on Wednesday, compared with 69 cents in the previous session.
Middle-distillate inventories in the Fujairah Oil Industry Zone rose 5.3% to a record 5.9 million barrels in the week to May 25, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 3.6 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019.
The June crack for 500 ppm Gasoil has dropped back to $2.40 /bbl with the 10 ppm crack at $ 4.90 / bbl. The regrade is at -$ 1.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Delivered bunker fuel premiums for 0.5% VLSFO came under pressure over the past week.
Fuel oil stocks held in the Fujairah oil hub retreated 9% from a record high in the previous week. Inventories for heavy distillates and residues fell 1.452 million barrels from the previous week to a two-week low of 15.001 million barrels in the week to May 25, data via S&P Global Platts showed. The inventories were 31% higher, compared with year-earlier levels.
China’s low-sulphur marine fuel exports rose by a third in April compared with March to the highest level after it waived export taxes for domestic refiners to meet shipping demand, according to Chinese customs data. Data from China’s General Administration of Customs showed April exports of the ship fuel reached nearly 1.43 million tonnes, up from 1.07 million tonnes in March and just below a combined 1.56 million tonnes for the first two months.
The June crack for 180 cst FO is lower at – $4.20 /bbl with the visco spread at $1.30 /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.