Crude Oil
Oil prices fell more than 5% on Wednesday, sending Brent to a four-month low as surging coronavirus infections in the United States and Europe prompted renewed lockdowns.
Brent crude futures fell $2.08 to settle at $39.12 a barrel. WTI crude futures fell $ 2.18 to $37.39 per barrel.
That was the lowest close for Brent since June 12 and for WTI since Oct. 2. It was the biggest daily percentage losses for both benchmarks since Sept. 8.
An estimated 1.23 MB/D of crude production and 1,205 MMcf/d of natural gas production was shut in, reflecting 66.6% and 44.5% of US Gulf output, respectively, according to the US BSEE, due to Hurricane Zeta.
Indian refiners have turned their focus to raising production of petrochemicals to cater for rising demand and help hedge against lower refined fuel margins, the country’s oil secretary and company officials said on Wednesday.
Robust demand from China and India has bolstered physical crude oil prices from around the world, traders said, in contrast to the futures market that is wrestling with over-supply and demand uncertainty wrought by COVID-1.
doe data
The DOE data showed a strong build in crude stocks. The build was largely due to return of crude production to more normal levels of 11 mb/d.
On the supportive side, there was a substantial draw in distillate stocks. This was largely due to a substantial increase of over 650 kb/d to 4.2 mb/d.
Today’s material balance statement suggests that the data is more bearish that reported with crude build understated and product draws overstated.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 1,178,544 (+7,104 DoD) yesterday. The total number of active cases rose by around 220,000 DoD 10.84 million. (Click here for details).
Naphtha
Asia’s naphtha open-specification front-month price persisted at a discount to the following month in reflection of a market awash with supplies despite a healthy stream of demand.
The Front-month contango for open-specification naphtha persisted at $7.50 a tonne, its lowest since April.
The November crack is lower at $ 2.15 /bbl
Gasoline
No fresh news on the gasoline markets.
The November crack is higher at $ 2.95 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for gasoil with 10 ppm sulphur content narrowed by a cent to 58 cents a barrel to Singapore quotes on Wednesday.
The gasoil EFS traded around minus $6 per tonne on Wednesday. Arbitrage is usually profitable when the EFS trades at about minus $15 a tonne or below, though it also depends on other factors such as freight rates.
The November crack for 500 ppm Gasoil is higher at $2.50 /bbl with the 10 ppm crack at $ 3.30 / bbl. The regrade is at -$ 1.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO front-month time spread slipped into contango of minus 25 cents a tonne on Wednesday, while the November crack against Dubai crude fell to a two-session low of $8.29 a barrel.
Meanwhile, fuel oil inventories in the Fujairah bunkering and storage hub fell 4% in the week to Oct. 26, falling back towards a multi-month low hit earlier in the month.
The November crack for 180 cst FO is lower at $0.30 /bbl with the visco spread at $1.15 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
We recommend hedging December Jap Naphtha-Dubai at current levels of $ 2.15 / bbl .
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.