Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices jumped 2% on Thursday on signs that the fallout from last weekend’s Hurricane Ida might last longer than thought as the U.S. government reported that crude production facilities as well as refineries on the East coast were still mostly shuttered after the storm.

Brent Crude futures settled at $73.01 per barrel, up $1.44. U.S. West Texas Intermediate oil settled at $69.99 per barrel, up $1.49.

Optimistic economic data and a weaker US dollar also contributed to the rally.

The number of Americans filing new claims for jobless benefits fell last week, while layoffs in August dropped to their lowest level in more than 24 years, suggesting the labor market was charging ahead despite new COVID-19 infections.

doe data

The DOE once again reported a huge draw in crude stocks which was not supported by ancillary data. Given that production grew by 100 kbd and utilization dropped by 134 kbd, there should have been a surplus in stocks notwithstanding the decrease of 50 kbd in net imports.

Gasoline demand was more or less constant while distillate demand grew significantly.

At a global level, the death toll from the COVID-19 virus rose to 4.55 Million (+10,493 DoD) yesterday. The total number of active cases rose by 50,000 DoD to 18.69 million
. (Click here for details).

The naphtha margin in Asia fell after crude oil prices rose over a decline in U.S. stocks.

The crack jumped to $121.73 per tonne, highest since early July, from $116.13 in the last session.

“Naphtha fundamentals in Asia gained some support on back of destruction caused by Hurricane Ida in the U.S Gulf coast, however the upside was short lived as cracker maintenance season in Asia hampered future demand outlook,” Refinitive Oil Research said in a report.

The September crack is higher at $2.75 / bbl.

Asia’s gasoline crack inched slightly lower on Thursday, despite strong demand outlook from India, as a surprise rise in the U.S. inventories weighed on market sentiment.

The crack slipped to $119 per tonne, from $121.73 in the last session.

The light distillates inventories at Singapore declined by 50,000 barrels to a three-week low of 13.181 million barrels in the week to Sept. 1, data from Enterprise Singapore showed.

The September crack is higher at $9.25 / bbl.


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

Cash differentials for gasoil with 10 ppm sulphur continued to rise, hitting a premium of 27 cents per barrel to Singapore quotes on Thursday, up .

Singapore’s middle distillate inventories rose 5.3% to 11.4 million barrels in the week to Sept. 1, according to Enterprise Singapore data.

Cash differentials for jet fuel dropped by 19 cents to a discount of 23 cents per barrel to Singapore quotes yesterday. These are the highest discount levels since July 21.

Asia’s cash differentials for jet fuel weakened on Thursday to their widest discounts in over six weeks, weighed down by frail buying interests in the physical market. Refining margins for jet fuel or cracks slipped to $6.87 per barrel over Dubai crude during Asian trading hours on Thursday, down from a multi-month peak of $7.01 per barrel on Wednesday.

Scheduled seat capacity in India rose by 129,000 seats or 4.5% this week, while flight capacity in China and Australia gained 11.7% and 4.7%, respectively, in the week to Monday, according to aviation data firm OAG. But global airlines in August have removed almost 100 million seats from their schedule for the August-December period with a majority of the capacity reduction driven by the Asia Pacific region, OAG said.

Global air cargo demand, however, provides some support to the struggling industry. The freight demand was up 8.6% in July compared with the corresponding month in pre-pandemic 2019, the International Air Transport Association (IATA) said on Tuesday.

The September crack for 500 ppm Gasoil is higher at $7.55 /bbl with the 10 ppm crack at $ 9.35 /bbl. The regrade is at -$ 1.05 /bbl. 

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

Buoyed by a tighter near-term supply outlook, Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market nudged higher on Thursday. The VLSFO prompt-month time spread, front-month crack against Dubai crude and cargo cash premium edged higher on Thursday

In the high-sulphur fuel oil market, prices for 180-cst HSFO were lower with cash premiums and front-month time spreads continuing their decline from the multi-month highs hit recently.

In the high-sulphur fuel oil (HSFO) market, cash premiums for 180-cst HSFO and 380-cst HSFO cargoes were lower amid absent deals in the Singapore window.

Onshore fuel oil stocks fell by 483,000 barrels, or about 76,000 tonnes, to 20.7 million barrels, or 3.26 million tonnes, their lowest since the week ended Feb. 24, according to Enterprise Singapore data.

The September crack for 180 cst FO is lower at  -$2.70 /bbl with the visco spread at $2.20 /bbl.

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

No fresh trades for 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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