Oil cruised to a fourth straight weekly gain, riding on the impact of unexpected supply shortages from the three-week old Hurricane Ida, despite a risk-off sentiment across markets on Friday that weighed partially on crude prices.
Brent Crude finished Friday’s official trade at $75.34 per barrel, down 33 cents, or 0.4%. Brent rose about 3.3% on the week.
U.S. West Texas Intermediate (WTI) settled at $71.97 per barrel, down 64 cents, or 0.9%. WTI was also up 3.2% on the week.
Friday’s slump followed five straight sessions of rises for Brent. On Wednesday, Brent hit its highest since late July, and U.S. crude hit its highest since early August.
The dollar climbed to a multi-week high on Friday, making dollar-denominated crude more expensive for those using other currencies. The dollar got a boost from better-than-expected U.S. retail sales data on Thursday.
Also weighing on markets was President Biden’s plan to raise corporate taxes by 5.5 percentage points to 26.5% and next week’s Fed meeting that could revisit the subject of taper for the central bank’s stimulus program that has juiced stock prices over the past 18 months.
As of Friday, some 19 days after the storm’s landfall, 422,078 b/d of crude, or 23.2% of the production in the U.S. Gulf Coast of Mexico remained shut-in, according to the Bureau of Safety and Environmental Enforcement, the government agency monitoring the situation.
The number of active oil rigs in the US rose by 10 to 411 in the week ended September 17 according to Baker Hughes. This is the highest since April, 2020.
At a global level, the death toll from the COVID-19 virus rose to 4.71 Million (+5,748 DoD) yesterday. The total number of active cases fell by 30,000 DoD to 18.68 million. (Click here for details).
Asian naphtha crack edged higher and posted a weekly gain, while the prompt inter-month spread widened in backwardation to $7.25 a tonne. The crack climbed to $137.58 per tonne from $136.13 in the previous session, registering a gain of $6.55 for the week.
Naphtha stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area rose to 299,000 tonnes in the week to Thursday from 296,000 tonnes last week, data from Dutch consultancy Insights Global showed.
The October crack is higher at $4.70 / bbl.
Asia’s gasoline crack inched lower on Friday, posting a weekly loss of 21 cents despite a 9% decline in Northwest European inventories.
The crack stood at $7.26 a barrel, down from $7.45 in the previous session.
ARA gasoline stocks fell to 757,000 tonnes from last week’s 833,000 tonnes due to fewer flows coming to the region along the Rhine river, and as exports increased, Insights Global’s Patrick Kulsen said.
The October crack is lower at $9.80 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for gasoil with 10 ppm sulphur rose 3 cents to a premium of 34 cents per barrel to Singapore quotes on Friday.
China’s diesel exports continued to fall in August, hitting their lowest since May 2015 after the government slashed fuel export quotas in an effort to limit production expansion and reduce emissions from the petroleum industry. Diesel shipments were 540,000 tonnes last month, down from 1.39 million tonnes in July and lower than a year earlier, data from the General Administration of Customs showed on Saturday. Jet fuel sales were 920,000 tonnes. China reduced a second batch of export quotas for refined fuel by 73% year-on-year in early August, forcing state-backed refiners to focus on the domestic market.
Asia’s cash differentials for jet fuel were at a premium of 4 cents per barrel to Singapore quotes on Friday, compared to a 6-cent discount on Thursday.
Asian refining margins for jet fuel jumped on Friday, soaring to their highest in over one-and-a-half years, buoyed by steady arbitrage flows to the West and hopes for a gradual recovery in regional aviation demand as wider vaccinations help countries to ease ongoing travel curbs.
Refining margins, also known as cracks, for jet fuel surged to $7.82 per barrel over Dubai crude during Asian trading hours, a level not seen since early March 2020. They were at $7.25 per barrel a day earlier.
“Strong East-West arbitrage economics had led to increased (jet fuel) exports to the West, relieving Asia’s stock build as Delta variant cases rise in the third quarter,” said Daphne Ho, senior analyst at Wood Mackenzie.
The October crack for 500 ppm Gasoil is higher at $9.20 /bbl with the 10 ppm crack at $ 10.70 /bbl. The regrade is at -$ 1.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash differentials for cargoes of 180-cst high-sulphur fuel oil (HSFO) extended gains on Friday, lifted by firm buying interest in the Singapore trading window.
The cash premium climbed to $23.36 a tonne to Singapore quotes on Friday, up from $22.23 in the previous session and near a two-year high of $24.44 on Sept. 8 as tight supplies struggle to keep up with soaring demand.
The 180-cst HSFO front-month time spread also climbed to a one-week high of $13.25 a tonne, while the front-month 180-cst HSFO crack discount dipped to $1.53 below Dubai crude, Refinitiv data in Eikon showed.
Fuel oil stocks in the ARA refining and storage fell 1% to 1.13 million tonnes in the week ended Sept. 16, data from Dutch consultancy Insights Global (IG) showed.
The October crack for 180 cst FO is lower at -$1.80 /bbl with the visco spread at $2.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No trades for now. We shall hedge 1Q Nap-Dubai rates over $3.75 / 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.