Commodity Market Report
Global product markets weekly: composite refining margins remain poor on weak transport fuel demand
Report summary
The North Sea Dated weekly average collapsed by US$3.09/bbl to US$39.41/bbl, hitting the lowest since mid-June. Bearish sentiment dominated the market as rising coronavirus infections are threatening hopes for a global oil demand recovery. Saudi Aramco lowered its October OSPs for all grades to Asian refiners, which the market took as a signal that oil demand recovery in Asia Pacific is losing its momentum, so pressuring crude oil prices. The contango of the M6-M1 spread for ICE Brent futures widened by US$0.42/bbl in the week, incentivising traders including Trafigura and BP to book tankers to store excess crude oil at sea again. Moreover, the freight rates of crude tankers remained low as an oversupply of tonnage persisted, supporting floating storage economics.
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