Oil Through the Looking Glass 17/6/20

*Crude Stocks and Virus Cases*

This morning we read that the API announced their prediction of US stock changes as a build of 3.86 mil bbls. It’s not as big as previous predicted builds we’ve seen recently, but it’s a build nonetheless, and has added to negative sentiment overnight that caused prices to fall. We have also seen a sustained rise in the number of virus cases being reported as part of a second wave in Beijing, and seeing the first wave hit Brazil hard, with cases projected to reach over 1 million.

 

*Physical Singapore Bunkers Down But Cautiously Optimistic*

Singapore bunker sales have dipped in May after having seen a year-on-year rise in monthly sales for 2020. Demand has been impacted by the coronavirus as fewer ships docked in the resultant economic downturn. Ship arrivals in Singapore plunged 43.7% year on year in May at 6,582 while cargo throughput dropped 20.4% year on year at 44.44 million mt, MPA data showed. Blank sailings – when a ship skips a port on its route or the entire journey is cancelled – have apparently become rampant. Despite this, Sing bunker margins have almost doubled in the last week from around $14 to $26. This pushes it to almost a 12 week high which was reached in Apr due to worries of supply from the financial trouble of Hin Leong.

 

*The Aviator*

Th IEA in their report yesterday reviewed their outlook for demand growth for next year. They wrote that in ‘2021 as a whole shows demand growing by 5.7 million barrels per day (bpd), which, at 97.4 million bpd, will be 2.4 million bpd below the 2019 level.’ The IEA also increased its forecast for 2020 after the strong rebound of China and India post the initial virus lockdown. That being said, it cites the huge drop in air travel as its reasoning for projecting that oil demand will not be totally back to pre-virus levels until 2022 because of the slow recovery of the airline fuel demand. Air travel has seen a small pick up in May, but is still down some 70% from 2019 levels. (FIS)