Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices settled higher on Monday as expectations of strong demand and a belief that a key producer group will not turn on the spigots too fast helped reverse initial losses caused by the release of fuel reserves by No. 1 world energy consumer China.

Brent crude  settled up 99 cents, or 1.1 %, to $84.71 a barrel after hitting a session low of $83.03. WTI crude gained 84 cents, or 0.6%, to $84.05, having fallen to $82.74 earlier.

“Crude prices still seemed poised to head higher, with some traders waiting for confirmation after both the EIA crude oil inventory shows demand for most products are headed in the right direction, while U.S. production is stable and with OPEC+ sticking to their gradual 400,000 bpd increase plan,” said Edward Moya, senior analyst at OANDA.

At a global level, the death toll from the COVID-19 virus rose to 5.01 Million (+4,595 DoD) yesterday. The total number of active cases rose by 60,000 DoD to 18.32 million. (Click here for details).

Asia’s naphtha refining profit margin gained on Monday after crude oil prices softened over China’s release of gasoline and diesel reserves.

The crack rose to $167.85 a tonne, strongest since July 2014, from $166.45 on Friday. The prompt inter-month spread widened in backwardation by $1.

The November crack is lower at $5.40 / bbl.

Asia’s gasoline crack also rose yesterday, buoyed by a rise in consumption in India and Indonesia amid tight supplies from China.

The refining profit margin for gasoline rose to $15.98 a barrel from $14.65 in the last session. In physical markets.

India’s gasoline sales rose by 3.93% from a year earlier to 2.48 million tonnes, preliminary sales data of state fuel retailers showed.

The November crack is unchanged at $15.30 / bbl.

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

Asian refining margins for 10 ppm gasoil rose on Monday, supported by firmer demand, while cash premiums for the industrial fuel jumped to their highest since July last year.

Cash differentials for gasoil with 10 ppm sulphur content, were at a premium of 78 cents per barrel to Singapore quotes, up from 73 cents per barrel on Friday.

Refining margins, also known as cracks, for 10 ppm gasoil climbed to $13.85 per barrel over Dubai crude during Asian trading hours, up from $13.27 per barrel on Friday.

India’s gasoil consumption in October rose above pre-COVID levels for the first time in a year, as increased industrial activity ahead of the festival season spurred demand for the fuel. Gasoil sales totalled 5.86 million tonnes last month, equivalent to 189,200 tonnes per day, up 1.27% from October 2019, but a decline of 5.08% from the same month last year, preliminary sales data of state fuel retailers showed.

Cash differentials for jet fuel were at a premium of 20 cents per barrel to Singapore quotes, a cent lower from a day earlier.

The November crack for 500 ppm Gasoil is higher at $11.80 /bbl with the 10 ppm crack at $ 13.10 /bbl. The regrade is at -$ 0.30 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) gained on Monday as firming utilities and bunkering demand for the fuel weighed on already tightening inventories, trade sources said.

VLSFO output has declined recently as refiners switched to maximising production of higher value refined fuels amid soaring gasoil and gasoline refining margins.

The VLSFO front-month crack also rose 13 cents a barrel to $12.68 above Dubai crude, ending a week long losing streak despite firming crude prices.

Fuel oil stocks in the ARA refining and storage slipped 2%, or by 19,000 tonnes, to 1.016 million tonnes in the week ended Oct. 28, data from Dutch consultancy Insights Global (IG) showed. The ARA fuel oil inventories were last lower in March 2020. Compared with last year, the inventories at the ARA hub were 26% lower and below the five-year seasonal average of 1.142 million tonnes.

The November crack for 180 cst FO is lower at  -$8.10 /bbl with the visco spread at $1.75 /bbl.

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

No Fresh trades today.

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.

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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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