Oil prices had their first meaningful drop in a week on Monday on uncertainty over production hikes that OPEC+ would likely agree to this week amid rising Covid cases in Asia.
Brent Crude finished the session down $1.24, or 1.6%, at $74.14 per barrel.
WTI crude settled down $1.14, or 1.5%, at $72.91 per barrel. It was the lowest settlement for WTI since June 22.
Prior to the selloff, WTI hit a 2018 high of $76.20 on Friday, while Brent hit a near three-year high of $76.20.
The correction in the latest session came amid reports that OPEC+ at its meeting this Thursday could increase oil production by between 500,000 and 1 million barrels per day starting in August. OPEC’s forecasts point to an oil supply deficit in Aug’21 and in the rest of 2021 as economies recover from the pandemic, suggesting the group and its allies have room to raise output at the meeting on Thursday this week.
Meanwhile, US shale producers are keeping their pledges to hold the line on spending and keep output flat, even with oil prices surging toward $75/bbl, a departure from previous boom cycles.
ADNOC will reduce the volume of crude oil it supplies to Asian term buyers by 15% in Sep’21, much deeper than the 5% reduction in term volume allocation in Aug’21, according to sources with direct knowledge of the matter.
Iran said on Monday it has yet to decide whether to extend a monitoring deal with the IAEA which lapsed last week, amid Washington’s warning that Tehran’s failure to renew it would complicate talks to revive its 2015 nuclear accord.
Hedge funds left their petroleum positions broadly unchanged, selling the equivalent of just 2 MMB in the week to 22 Jun’21, after heavy buying in the three previous weeks took the overall bullish position to an 18-month high.
At a global level, the death toll from the COVID-19 virus rose to 3.95 Million (+6,005 DoD) yesterday. The total number of active cases rose fell by around 50,000 DoD to 11.50 million. (Click here for details).
Indonesia has recorded its biggest daily rise in coronavirus infections on Sunday and was pushing for stricter curbs, while Thailand announced new restrictions centred around its capital Bangkok for 30 days starting Monday in a bid to tackle the country’s worst outbreak.
Malaysia has also extended a national lockdown beyond Monday to curb the spread of the virus.
Hong Kong will ban all passenger flights from the UK from Thursday to curb the spread of the Delta variant of COVID-19, the government said on Monday. Britain will be specified as extremely high-risk.
Asia’s naphtha crack was assessed at $98.85 per tonne, the lowest since June 24, from $102.10 per tonne in the previous session.
The July crack is unchanged at $0.70 / bbl
Asia’s was assessed at $5.73 per barrel, the lowest since June 22, after hitting a six-week-high of $6.67 per barrel last Friday.
The July crack is lower at 8.90 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asian refining margins for 10 ppm gasoil slipped on Monday, plunging to their weakest level in a month, as several countries in the region stepped up lockdown measures to battle rising COVID-19 infections.
Cash differentials 10 ppm gasoil were at a discount of 7 cents per barrel to Singapore quotes on Monday, while the front month time spread for the fuel grade remained in a narrow contango to trade at minus 2 cents per barrel
Cash differentials for jet fuel narrowed by 3 cents discount of 47 cents per barrel on Monday.
Global scheduled airline capacity was up 4.2% WoW starting 28 Jun’21 to an 18-month high of 75.5 million seats, according to OAG. Global scheduled capacity is still 35% lower than the same week in 2019.
The July crack for 500 ppm Gasoil is lower at $5.60 /bbl with the 10 ppm crack at $ 7.60 /bbl. The regrade is at -$ 0.70 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month 0.5% very low-sulphur fuel oil (VLSFO) time spread and crack against Dubai crude firmed on Monday as some market participants rolled their positions ahead of the June contracts’ expiry, trade sources said.
The July/August VLSFO spread climbed to a one-month high of 75 cents a tonne while the July crack firmed to a three-week high of $12.07 a barrel above Dubai crude, Refinitiv data in Eikon showed.
By contrast, in the physical markets, VLSFO cash differentials dropped to a more than two-week low of minus 90 cents a tonne to Singapore quotes on sluggish spot demand and plentiful supplies.
The June crack for 180 cst FO is lower at -$5.75 /bbl with the visco spread at $1.10 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No fresh action 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.