Global crude prices edged higher on Thursday but lost more than a fifth of their value in 2020, as lockdowns to combat the novel coronavirus depressed economic activity and sent oil markets reeling.
On the last trading day of 2020, Brent rose 17 cents to settle at $51.80 a barrel. U.S. West Texas Intermediate rose 12 cents to settle at $48.52 a barrel.
Brent fell 21.5% for the year, with WTI falling 20.5%. Prices for 2020 bottomed in April as fuel demand collapsed due to the COVID-19 pandemic and after a price war between oil giants Saudi Arabia and Russia.
The demand outlook for fuel still remains murky. U.S. gasoline futures fell 17% for the year, while U.S. heating oil futures dropped 27%.
The next major oil price driver will come Monday as the OPEC+ group plan to debate boosting crude output from February. OPEC sees plenty of downside risks for oil markets in 1H’21, its secretary general said on Sunday, a day before meeting allies led by Russia to discuss output levels for Feb’21.
Iraq, on 2 Jan’21, defused a sea mine attached to the tanker, Pola, in the Persian Gulf without impact on crude exports or loadings. Pola was used by SOMO as floating storage vessel for HSFO intended for exports.
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At a global level, the death toll from the COVID-19 virus rose to 1,780,965 (+9,105 DoD) yesterday. The total number of active cases rose by around 40,000 DoD to 22.12 million. (Click here for details).
Asia’s naphtha crack jumped to $102.33 per tonne on Thursday, its strongest since Dec. 13, 2019. The crack, which has gained 19% in the past week, was at $91.50 a tonne on Wednesday.
The January crack is higher at $2.10 /bbl.
Meanwhile, Asia’s gasoline crack rose to a near three-month high of $3.56 per barrel on Thursday, the last trading day of this year. It was at $3.01 per barrel a day earlier.
Despite an improvement in road fuel demand in recent weeks, market watchers remain concerned that further recovery in gasoline consumption might take a hit as several countries have reimposed mobility restrictions to contain a new mutant variant of the coronavirus.
The gasoline crack in Singapore has averaged $1.70 per barrel this year, compared with an average of $5.32 per barrel last year.
The January crack is lower at $4.20 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asian refining margins for jet fuel slipped on Thursday amid lacklustre aviation demand.
Refining margins, or cracks, for jet fuel dipped 14 cents to $4.44 per barrel over Dubai crude on Thursday, the last trading day of this year. The jet fuel cracks in Singapore, which have gained 25.8% this month, have averaged $3.02 per barrel over Dubai crude this year.
The front-month spread has narrowed its contango by about 64% in the last two months.
Market watchers remain hopeful that COVID-19 vaccines would help ease travel restrictions in 2021, taking grounded international flights back to the skies.
Cracks for 10 ppm gasoil, which have climbed 15% in the past month, slipped 12 cents to $6.09 a barrel over Dubai crude during Asian trading hours. Cracks for the benchmark gasoil grade in Singapore have averaged $6.78 per barrel over Dubai crude this year, compared with an average of $15.49 per barrel last year..
The January crack for 500 ppm Gasoil is unchanged at $5.05 /bbl with the 10 ppm crack at $ 6.40 / bbl. The regrade is at -$ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 0.5% VLSFO cash premiums extended gains on Thursday, lifted higher by expectations of tightening near-term supply amid lower refinery output and firm regional demand.
VLSFO cash premiums climbed to a one-month high of $1.44 a tonne to Singapore quotes, up from 10 cents a tonne at the start of the week.
VLSFO cracks held firm at $11.09 a barrel above Dubai crude, off an eight-month high of $11.23 in the previous session.
The January crack for 180 cst FO is lower at -$2.80 /bbl with the visco spread at $0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We recommend adding one tranche more of Feb Jap-Nap – Dubai at current levels of $ 1.70 / 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.