Crude Oil
Oil prices settled lower on Friday as new coronavirus cases spiked in the United States and China.
Brent crude settled at $40.91 a barrel, down 3 cents. WTI crude futures settled at $38.49 a barrel, down 23 cents.
Earlier gains, supported by optimism over rising road traffic boosting fuel demand, were erased in U.S. trading on fears that spiking COVID-19 infections in large gasoline-consuming U.S. states could stall the demand recovery.
Profits at China’s industrial firms in May’20 rose 6% YoY to 582.3 billion yuan ($82.28 billion), rising for the first time in 6 months, according to official data, suggesting the country’s economic recovery is gaining.
US energy firms cut 1 oil rigs in the week to 26 Jun’20 to total 188 (-605 YoY), the 8th week in a row the US count fell to a fresh record low, according to Baker Hughes.
Hedge funds and money managers boosted their bullish bets on US crude in the week to 23 Jun’20, raising its net positions by 1,529 to total 378,702 contracts , according to data from the US CFTC on Friday.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 504,078 (+3,454 DoD) yesterday, with the total number of confirmed infections at 10,238,287 (+163,172 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack recovered from a one-week low in the previous session to a two-session high of $78.08 a tonne on Friday, supported by strong demand and tight supplies.
The intermonth spread hit a fresh 4-1/2 month high of $15 a tonne in line with the strong fundamentals.
Naphtha crackers in Asia are either operating at full rates or high runs to cater to plastics demand. Naphtha in a cracker is processed mainly into ethylene, which goes mostly into plastics production.
The July crack is higher at -$0.15 / bbl today.
Gasoline
Asia’s gasoline crack, on the other hand, extended losses to hit a 1-1/2 week low of $1.96 a barrel premium over Brent crude. Concerns among sellers mounted amid a resurgence of new coronavirus infections found in countries which had recently eased lockdown measures.
Indonesia’s PT Pertamina said on Saturday its average daily fuel sales has risen to 114,000 KL (~717 KB) since 8 Jun’20 amid gradual easing of coronavirus-related restrictions on movement, a 10% increase from when cities imposed semi-lockdowns.
The July crack is lower at $2.45 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian refining margins for jet fuel dropped on Friday as the possibility of a renewed coronavirus wave dampened recovery hopes for the aviation fuel, with countries planning not to widely open up to international travelers to avoid imported cases.
The July/August time spread for the aviation fuel in Singapore widened its contango on Friday to trade at a discount of 70 cents per barrel.
The regrade, which is the price spread between jet and gasoil, for July stood at minus $4.38 a barrel on Friday, as against minus $3.85 on Thursday.
Cash discounts for jet fuel were at 79 cents a barrel to Singapore quotes, compared with a 76-cent discount in the previous session.
Cash differentials for 10 ppm gasoil were at a premium of 74 cents a barrel to Singapore quotes on Friday, up from Thursday’s 72 cents per barrel.
Gasoil stocks in ARA 4.2% to 2.8 million tonnes in the week to June 25. ARA jet fuel inventories rose 4.7% to 920 KT. Compared with a year earlier, jet fuel stocks were 11.2% higher, while gasoil inventories were up 0.2%.
The July crack for 500 ppm Gasoil is lower at $5.05 /bbl with the 10 ppm crack at $ 6.05 / bbl. The regrade is at -$ 4.05 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst HSFO cash differential was at its narrowest since April 7 on Friday, extending a four session winning streak amid limited supplies of high-sulphur residual fuels and higher seasonal demand for use in power generation.
The narrower discount came despite an absence of trade deals on Friday. The cash discount was at minus $3.19 a tonne to Singapore quotes, up from minus $4.34 a tonne in the previous session.
Fuel Oil stocks in ARA slipped 1% from the previous week to 1.502 million tonnes in the week to June 25. Compared with last year, the ARA fuel oil inventories were 22% higher and were well above the five-year seasonal average of 1.286 million tonnes.
China’s low-sulphur marine fuel exports fell 20% last month to 1.14 million tonnes compared with April, reflecting a monthly dip in demand from international shipping, Chinese customs data released late on Thursday showed. Exports for the first five months totalled about 5.2 million tonnes.
The July crack for 180 cst FO is lower at – $3.65 /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.