Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices jumped almost 5% Monday as a raft of new sanctions throttled Russia’s economy and exports, including its prized crude that’s valuable to both Moscow and the world, as the West stood steadfast in punishing President Vladimir Putin for his invasion of Ukraine.

Brent crude futures for May delivery, settled up $3.14 (nearly 4%) at $97.26 per barrel.

WTI crude futures settled up $4.13, or 4.5%, at $95.72 for its April delivery contract. WTI hit a session peak of $98.94.

The United States, Britain, Europe and Canada blocked the access of various Russian banks to the SWIFT global interbank payment system —  squeezing the billions of dollars the country trades a day in oil and other commodities — as Putin’s forces ravaged Ukraine for a fifth straight day.

The West had taken pains initially not to target Moscow’s energy exports with sanctions due to its own reliance on Russians oil and gas. But over the weekend, that mindset clearly changed, with EU officials affirming on Monday their plan to wean the bloc from its dependence on Russian energy, while being prepared to suffer in the short-term from spiraling oil and gas costs due to that decision.

BP had made an announcement to exit its Russian investments over the weekend. Yesterday, they were joined by Shell and Equinor.

The OPEC+ group, meanwhile, is expected to stay with its gradual output increase strategy when it meets this week, ignoring calls from consuming nations for increased output.

Iran said on Monday efforts to revive a 2015 nuclear deal could succeed if the United States took a political decision to meet Tehran’s remaining demands, as months of negotiations enter what one Iranian diplomat called a “now or never” stage. A successful outcome to the talks could pave the way for the legitimate return of Iranian oil to the market, after U.S. sanctions imposed since 2018.

At a global level, the death toll from the COVID-19 virus rose to 5.98 Million (+5,741 DoD) yesterday. The number of daily deaths crossed 10,000 after a very long period. The total number of active cases fell by 960,000  DoD to 62.70 million. (Click here for details).

Asia’s naphtha crack extended rally on Monday, hitting the highest level since July 2014 as Western sanctions on Russia over Ukraine invasion exacerbated supply fears.

The refining profit margin jumped to $176.28 a tonne, up $6.15 in the last session. Naphtha margins gained over 9% last week after a Turkish-owned ship was hit by a bomb off the coast of Ukraine’s port city Odessa.

Naphtha stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area dropped to 149,000 tonnes in the week ended Thursday, from 177,000 tonnes in the prior week. 

The March crack has jumped to $4.55 per barrel. 

Asia’s gasoline crack dipped by 8 cents to $11.27 a barrel.

The March crack is lower at 16.25 /bbl.

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

Asian refining margins for 10 ppm gasoil slipped on Monday as raw material crude prices kept surging, while traders were concerned higher pump prices might weigh on near-term demand even as COVID-19 restrictions ease further.

Cash differentials for gasoil with 10 ppm sulphur content were at a premium of $2.06 a barrel to Singapore quotes, 11 cents higher from a day earlier. 

Refining margins, fell to $18.33 a barrel over Dubai crude during Asian trading hours, down from $18.48 per barrel on Friday.

The Gasoil EFS was trading at -$42 per tonne, making the arbitrage wide open.

The March crack for 500 ppm Gasoil is higher at $17.45 /bbl with the 10 ppm crack at $18.45 /bbl. The regrade is at -$3.15 /bbl.

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

Asia’s front-month crack for 0.5% very low-sulphur fuel oil (VLSFO) rose on Monday to its strongest level in more then two years as traders expect tighter supplies in the coming weeks amid shrinking Western arbitrage flows into the region.

The front-month VLSFO crack jumped to $22.43 per barrel against Dubai crude during Asian trading hours, a level not seen since January 2020. The crack was at $20.61 per barrel on Friday.

Cash differentials for Asia’s 0.5% VLSFO were at a premium of $17.78 a tonne to Singapore quotes on Monday, compared with $16.91 per tonne on Friday, wile the March/April VLSFO time spread widened its backwardation to trade at $24.25 a tonne on Monday.

Asia’s cash premiums for 380-cst high sulphur fuel oil (HSFO) were at 72 cents per tonne to Singapore quotes, compared with 65 cents per tonne at the end of last week.

The 380-cst HSFO barge crack for March traded at a discount of $16.51 a barrel to Brent on Monday, compared with minus $15.34 a barrel on Friday.

The February crack for 180 cst FO is higher at  -$9.33 /bbl with the visco spread at $1.90 /bbl.

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

We will hedge Naphtha Dubai for April at current levels of $ 4.75 per barrel


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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