Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices rebounded Thursday from two days of heavy selling, after a lack of compelling news on Covid’s Omicron variant, and as producer alliance OPEC+ stuck to the number of barrels it planned to roll out in January.

Brent crude futures settled up 80 cents, or 1.2%, at $69.67 a barrel after touching a low of $65.72 on the day.

WTI crude futures rose 93 cents, or 1.4%, to $66.50 a barrel, after dipping as low as $62.43.

The market sold off dramatically after the Organization of the Petroleum Exporting Countries and its allies known as OPEC+ issued a bit of a surprise by sticking to plans to boost output monthly by 400,000 barrels per day.

Oil futures rebuilt the rally by the end of the day, but the combination of uncertainty around the Omicron variant, efforts by governments to stem the tide of new infections and expectations for more supply kept traders on their toes.

At a global level, the death toll from the COVID-19 virus rose to 5.25 Million (+7,095 DoD) yesterday. The total number of active cases rose by 280,000 DoD to 20.72 million. (Click here for details).

Asia’s naphtha crack was largely steady on Thursday at $146.18 per tonne, down by 60 cents from the previous session.

The December crack is lower at $ 3.70/bbl.
The January crack is at $ 4.00 /bbl.

Asia’s gasoline crack extended gains on Thursday, moving further away from a two-month low hit at the end of November.

The gasoline crack rose to $8.79 a barrel, up from $7.87 a barrel in the previous session.

Singapore’s light distillate inventories jumped 12% to their highest in six weeks of 12.28 million barrels in the week to Dec. 1, Enterprise Singapore data showed. The inventories, which include gasoline and naphtha, were 1% higher than year-ago levels but were below the 2021 weekly average of 13.42 million barrels, the data showed.

The December crack is higher at $9.90/ bbl.
The January crack is at $10.30/ bbl.

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

Cash differentials for gasoil with 10 ppm sulphur content  were 6 cents higher at a premium of 26 cents per barrel over Singapore quotes.

Asian refining margins for 10 ppm gasoil rose for a second straight session on Thursday, while cash premiums for the industrial fuel grade rose after middle distillate inventories in Singapore slumped to their lowest level in more than 3-1/2 years.

Refining margins, also known as cracks, for 10 ppm gasoil jumped to $11.72 a barrel over Dubai crude during Asian trading hours, the strongest since Nov. 19. They were at $10.88 per barrel a day earlier.

Singapore’s middle distillate inventories dropped 5.2% to 8.01 million barrels in the week to Dec. 1, according to Enterprise Singapore data. This week’s stocks were about 50% lower than a year earlier.

Cash differentials for Jet rose by 6 cents to a premium of 50 cents over Singapore quotes. 

Refining margins or cracks for jet fuel climbed to $8.63 per barrel over Dubai crude during Asian trading hours, compared with $7.10 per barrel a day earlier. 

The December crack for 500 ppm Gasoil is higher at $10.00/bbl with the 10 ppm crack at $11.00 /bbl. The regrade is at -$0.75 /bbl.
The January crack for 500 ppm Gasoil is at $10.85/bbl with the 10 ppm crack at $11.85 /bbl. The regrade is at -$0.55 /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) jumped on Thursday to a more than nine-month high, while the cash premium for the marine fuel extended its winning streak to a eleventh straight session.

The front-month VLSFO crack jumped to $15.45 per barrel against Dubai crude during Asian trade, compared with $13.31 per barrel a day earlier and its highest since Feb. 25, Refinitiv data in Eikon showed.

Similarly, VLSFO cash differentials prolonged its near two-week long winning streak, climbing to a premium of $22.60 a tonne to Singapore quotes on Thursday, their highest since February 2020 and its third highest on record.

Onshore fuel oil stocks fell by 3.09 million barrels, or about 486,000 tonnes, to 19.82 million barrels, or 3.12 million tonnes, Enterprise Singapore data showed. Compared to the same period last year, the residual fuel stocks were 23% lower and well below the 2021 weekly average of 22.6 million barrels.

The December crack for 180 cst FO is higher at  -$7.20 /bbl with the visco spread at $1.50 /bbl.
The January crack for 180 cst FO is at  -$6.05 /bbl with the visco spread at $1.35 /bbl.

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

No Fresh trades today. However, we would like to take the opportunity to highlight the reason for risk management today. We had some time ago recommened hedging gasoil cracks in excess of $15.00/barrel. Those who had done similar trades would be really grateful for their sagacity.

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

Leave a Comment