Resuming the blog after a long hiatus. Apologies for the long break

Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices closed steady on Tuesday after recovering from a near three-week low, drawing support from a weakening dollar. An uptick in November demand for U.S. crude and petroleum products, reported belatedly by the EIA, or Energy Information Administration, also bolstered prices.

The more active second-month Brent contract settled at $85.46 a barrel, up 96 cents or 1%, while the U.S. West Texas Intermediate crude futures settled at $78.87 a barrel, up 97 cents or 1.3%.

The Brent April futures and U.S. front-month WTI gained after the U.S. Energy Information Administration reported that demand for U.S. crude and petroleum products rose 178,000 barrels per day (bpd) in November to 20.59 million bpd, the highest since August.

In Monday’s session, both WTI and Brent fell just over 2% after the Russian government said it had not set a floor price for its oil exports despite being opposed in principle to the G7’s cap of $60 per barrel. The Kremlin also announced that oil companies in Russia, not the government, will decide on contract wording for crude sales.

Despite the government’s protests against the $60 cap, Russia’s benchmark Urals crude was already trading at a discount of between $30 and $35 a barrel to Brent, and Monday’s statements were interpreted as encouraging that gap to grow.

A Reuters survey shows 49 economists and analysts expect Brent crude to average more than $90 a barrel this year, the first upward revision since a poll in October, with gains likely driven by demand from top consumer China
On the U.S. oil inventory side, market participants were also on the lookout for weekly stockpiles data due after market settlement from the API, or American Petroleum Institute.

API Data

The API data has shown huge stock builds in both crude and products. We shall await official data later today.


Asia’s naphtha refining profit margin rose by $1.50 to $62.63 a tonne over Brent crude on Tuesday.

The February crack is unchanged at -$ -4.20 per barrel 

Asia’s refining profit margin for gasoline slipped by around $2 to $12.90 a barrel over Brent crude.

Pakistan could face a crunch in fuel supplies in February as banks have stopped financing and facilitating payments for imports due to depleting foreign exchange reserves, traders and industry sources.

The February crack is higher at $16.90 per barrel.

Click Here for a graphical depiction of Global Gasoline stocks by region.

Asia’s 10 ppm sulphur gasoil margins extended losses for a second consecutive session, as cautious trading sentiment continue to weigh on discussion levels and market activity on Tuesday.

Cash differentials for 10 ppm gasoil stood at a premium of $2.89 a barrel to Singapore quotes, down from $2.99 in the previous session.

Refining margins for 10 ppm gasoil fell to fell to $32.01 per barrel.

Cash differentials for jet rose to a premium of $2.40 a barrel to Singapore quotes, up from $ 2,19 a barrel in the previous session.

Refining margins for jet fell to $31.81 a barrel even though some mid-February short covering was still present in the open market.

The February crack for 10 ppm Gasoil is higher at $33.5 /bbl. The 10 ppm regrade is at $0.10 /bbl.

Click Here for a graphical depiction of Global Distillate stocks by region.

Asia’s fuel oil margins fell on Tuesday, posting monthly losses on the last trading day of the month as the East of Suez market continued to receive ample supplies.

The front-month crack for 0.5% VLSFO was at a premium of $16.28 a barrel to Dubai quotes at Tuesday’s Asia close (0830 GMT), slipping more than 6% from last month.

Fuel oil supplies to East Asia totalled about 5 million tonnes in January, steady to higher from December, Refinitiv ship-tracking data showed, with close to 3 million tonnes already expected to load for February as of Tuesday.

Meanwhile, high sulphur fuel oil (HSFO) cracks also recorded monthly declines. The front-month 180-cst HSFO crack fell to a discount of 18.46 a barrel on Tuesday.

The February crack for 180 cst FO is lower at – $19.00 /bbl with the visco spread at $2.20 /bbl.

Click Here for a graphical depiction of Fuel Oil stocks by region.

Since we are resuming coverage after a long while, a couple of lines here today. Gasoline cracks have been running really strong and we have laid on hedges as shown above (we have been tracking markets even though we have not been posting a commentary on the same). Gasoil cracks continue to be strong, though not having the strength shown 6 months ago. We will continue to monitor both and report regularly

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.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

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