Crude Oil
Oil prices rose on Monday on the back of positive economic news from the Euro zone. Brent crude gained 69 cents to settle at $41.71 a barrel. U.S. crude rose $1.21 to settle at $39.70 a barrel.
The recovery of economic sentiment in the euro zone intensified in June with improvements across all sectors, European Commission data showed on Monday. Overall sentiment rose to 75.7 points in June from 67.5 in May.
However, fears of a second wave of the pandemic are keeping prices from going higher. Some states in the United States have reimposed restrictions after jumps in cases. California ordered bars to close on Sunday following similar moves in Texas and Florida. Washington state and the city of San Francisco have paused their reopening plans.
Japan’s industrial output fell for a fourth straight month in May’20, with factory output falling 8.4% MoM to 79.1 according to METI data, the lowest level since Mar’09, highlighting the widespread impact of the coronavirus.
Libya’s NOC hopes oil production will resume after international talks to end a blockade by eastern-based forces in the civil war, which has stopped almost all energy exports for six months, it said on Monday.
BP has agreed to sell its global petrochemicals business to Ineos for $5 billion, pulling out of a sector widely seen as a key driver of oil demand growth in the coming decades.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 507,528 (+3,415 DoD) yesterday, with the total number of confirmed infections at 10,402,906 (+160,985 DoD). (Click here for details).
Naphtha
Fears of rising coronavirus cases in many countries, including China, India, Australia and the United States were dragging on naphtha cracks which fell to a near two-week low of $65.40 a tonne although crackers were still mostly running at full rates or high throughput.
A string of purchases were seen last week, causing premiums to rise their highest levels since January.
The July crack is lower at -$0.40 / bbl today.
Gasoline
Asia’s gasoline crack dived about 71% to a three-and-a-half-week low of 57 cents a barrel premium over Brent crude.
Asian gasoline exports for June are expected at around 4 million tonnes, rebounding from the lowest level seen this year at about 3.4 million tonnes for May.
The July crack is lower at $1.95 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel remained unchanged at 79 cents a barrel to Singapore quotes on Monday.
The region’s biggest aviation market China, which showed the first hopes of a demand recovery, is now dealing with a new wave of coronavirus cases in its capital city, while major tourism hub Vietnam said it has no plans to open up to international tourists yet over fears of a second wave of infections.
Thailand announced a lift on a ban on international flights on 1 Jul’20, coming after the government approved some foreign travel to the country including business travellers and foreigners with spouses, work permits or residency in the country.
The July crack for 500 ppm Gasoil is higher at $5.20 /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 discount since April 3 on Monday due to limited supplies and pockets of buying interest in the Singapore trading window. The cash discount was at minus $2.75 a tonne to Singapore quotes, up from minus $3.19 a tonne on Friday.
Trade activity of HSFO cargoes in the Singapore trading window had out-stripped that of 0.5% VLSFO cargoes since May. A total of 220 KT of HSFO cargoes were traded so far this month compared to just 20 KT of VLSFO.
The July crack for 180 cst FO is higher at – $3.05 /bbl with the visco spread at $1.05 /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.