Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices fell more than 3% on Monday after weak economic data from China and the United States, the world’s top oil consumers, and higher crude output from OPEC producers stoked fears of weakness in oil demand and oversupply.

Brent Crude futures settled down $2.52, or 3.3%, at $72.89 a barrel. WTI ended $2.69, or 3.6%, lower at $71.26 per barrel.

China’s factory activity growth slipped sharply in July as demand contracted for the first time in more than a year, a survey showed on Monday.

U.S. manufacturing activity also showed signs of slowing. The pace of growth slowed for the second straight month as spending rotates back to services from goods and shortages of raw materials persist, according to data from the Institute for Supply Management (ISM). The ISM’s index of national factory activity fell to 59.5 last month, the lowest reading since January, from 60.6 in June.

Adding to the weight on oil was higher output from the OPEC, which pumped an estimated 610 million barrels per day in July, its highest since April 2020, according to a Reuters survey.

At a global level, the death toll from the COVID-19 virus rose to 4.25 Million (+7,750 DoD) yesterday. The total number of active cases rose by 140,000 DoD to 15.28 million. (Click here for details).

 

Asia’s naphtha crack extended losses on Friday, tracking weaker crude oil prices, moving further away from more a than five-and-a-half-year high recorded last week.

The naphtha crack slipped to $133.35 a tonne on Monday, down from $138.05 a tonne in the previous session. On Thursday, the naphtha crack hit $142.60 a tonne, its highest since January 2016.

The August crack is lower at $3.30 / bbl

Asia’s gasoline crack was largely steady on Monday at $8.76 a barrel, down 2 cents from Friday.

India’s daily gasoline consumption exceeded pre-pandemic levels last month as states relaxed COVID-19 related lockdowns while gasoil sales were low, signalling subdued industrial activity in July, showed preliminary sales data of state fuel retailers. Daily sales of gasoline rose to 76,500 tonnes in July, a jump of about 3.6% over the corresponding 2019 period and 5.7% over June this year, preliminary industry data showed on Friday.

The August crack is lower at $10.90 / bbl

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

Asian refining margins for 10 ppm gasoil flipped to a narrow discount of 2 cents per barrel on Monday, compared with a 4-cent premium on Friday.

Cash differentials for gasoil with 10 ppm sulphur content were a cent lower at a premium of 4 cents per barrel on Friday.

Asia’s gasoil crack  climbed to $8.73 per barrel over Dubai crude during Asian trading hours, the highest level since June 4. They were at $7.69 per barrel on Friday.

Daily gasoil sales, which account for about two-fifths of India’s overall refined fuel consumption and is directly linked to industrial activity in Asia’s third-largest economy, was about 10.9% less than the same period in 2019, data showed. It was about 3.5% lower than daily gasoil sales in June.

Cash differentials for jet fuel  were 3 cents lower at a discount of 19 cents per barrel to Singapore quotes on Monday.

The August crack for 500 ppm Gasoil is lower at $6.00 /bbl with the 10 ppm crack at $ 7.50 /bbl. The regrade is at -$ 0.55 /bbl. 

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

Asia’s high-sulphur fuel oil (HSFO) firmed on Monday amid tight supply and firm demand from both utilities and refiners.

The front-month 180-cst HSFO time spread hit a more than one-and-a-half-year high of $5.50 a tonne on Monday, Refinitiv data in Eikon showed, after Pakistan’s PSO recently issued several tenders seeking fuel oil imports in August through to October.

Cash premiums, the front-month time spread and crack of Asia’s 0.5% very low-sulphur fuel oil (VLSFO) all firmed to near two-week highs amid a relatively tight supply outlook that is expected to last throughout August, trade sources said.

The August crack for 180 cst FO is lower at  -$5.95 /bbl with the visco spread at $1.45 /bbl.

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

No fresh action today. We shall hedge the September gasoline crack above $11.00 / 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.

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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