Crude Oil
Oil prices rose on Wednesday after a steep drop in U.S. crude inventories.
Brent crude settled 53 cents higher at $43.75 per barrel, while WTI rose 23 cents to $41.27 a barrel.
The surge in US coronavirus cases is beginning to weigh on economic activity, the head of the Federal Reserve said on Wednesday, as all FOMC members voted to leave the target range for short-term rates at 0% – 0.25%.
The Trump administration is readying a new initiative that would use financial incentives to encourage US firms to move production facilities out of Asia and into the US, Latin America and the Caribbean, a senior White House adviser said.
DOE data
U.S. crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, the largest draw down since December. The huge drawdown is attributable to a drop in net crude imports by 1 million barrels per day to 1.9 million bpd. It is also exacerbated by a 1.6% increase in run rates to 79.5%.
Product stocks built notwithstanding an increase in demand. The distillate build could be due to a drop in exports; however, the material balance statement suggests an anomaly.
The distillate material balance suggests a draw rather than a build.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 669,572 (+7,036 DoD) yesterday, with the total number of confirmed infections at 17,177,560 (+290,722 DoD). This is a record growth in cases (Click here for details).
One person in the US died about every minute from COVID-19 on Wednesday as the national death toll surpassed 150,000, the highest in the world. The US recorded 1,461 new deaths on Wednesday, the highest 1-day increase since 27 May’20.
Naphtha
Asia’s naphtha crack fell to a 1-1/2 week low of $68.75 a tonne.
The August crack is lower at $ -1.05 /bbl
Gasoline
Asia’s gasoline crack hit its lowest in 4-1/2 weeks at 60 cents a barrel as demand recovery was threatened by the new wave of coronavirus infections.
The August crack is lower at $1.15 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for 10 ppm gasoil on Wednesday plunged to their lowest in more than seven weeks, as concern mounted over a surge in near term supplies and resurgent coronavirus cases are expected to cut industrial demand.
Cash premiums for gasoil with 10 ppm sulphur content slipped to 20 cents a barrel to Singapore quotes, the lowest since June 8. They were at a premium of 27 cents per barrel a day earlier.
The August crack for 500 ppm Gasoil is higher at $6.15 /bbl with the 10 ppm crack at $ 7.00 / bbl. The regrade is at -$ 4.05 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month time spread and cash differential for Asia’s 0.5% VLSFO swung back into positive territory, lifted higher by expectations of shrinking refinery output and lower arbitrage supplies in August.
The front-month time spread has seesawed between contango and backwardation over the past 10 days. The Aug/Sept VLSFO time spread jumped to a backwardation of $1 per tonne, up from a discount of 75 cents a tonne in the previous session.
The August crack for 180 cst FO is higher at – $2.30 /bbl with the visco spread at $0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
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.
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.