Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude prices began 2022 by clawing back a chunk of what they lost on the final day of last year as global oil producing alliance OPEC+ sought to prevent any undue impact to demand from Covid variants.

Brent crude futures finished up $1.20, or 1.5%, at $78.98 per barrel. On Friday, the last trading day for 2021, Brent lost around 2% on Friday.

WTI crude futures  settled up 87 cents, or 1.2%, at $76.08 per barrel.WTI also lost 2% on Friday.

In a market assessment released over the weekend ahead of its Tuesday meeting, OPEC+ said it expected the impact to oil demand from the Omicron variant to be “mild and short-lived”, as the world becomes better equipped to manage the Covid pandemic. The relentless chatter aimed at keeping the oil market in a positive hype ahead of the OPEC meeting and production hike had the desired effect. (Hype or otherwise, we agree with the OPEC+ assessment).

Monday’s market rebound was also helped by news that Libya, one of OPEC’s more important oil drillers, was expected to lose about 200,000 barrels daily in output over the next week because of a damaged pipeline.


At a global level, the death toll from the COVID-19 virus rose to 5.47 Million (+4,297 DoD) yesterday. The total number of active cases rose by 650,000 DoD to 32.10 million. (Click here for details).

Many U.S. schools that would normally welcome students back to classrooms on Monday are delaying their start dates, scrambling to test pupils and teachers and preparing, as a last resort, to return to remote learning as record numbers of COVID-19 cases from the Omicron variant sweep the country.

Asia’s naphtha crack fell to $157.18 a tonne from $164.35 on Friday. The prompt inter-month spread narrowed in backwardation to $11.25.

The January crack is lower at $ 4.90 /bbl.

Asia’s gasoline crack crack climbed to $12.31 per barrel, up $1.17 from its last close.

Daily gasoline sales in Asia’s key fuel market India rose 3.21% month-on-month to 81,950 tonnes in December as motorists preferred to use personal vehicles to protect against COVID-19, preliminary sales data compiled by the industry showed.

The January crack is lower at $13.10/ bbl.

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

Asian refining margins for 10 ppm gasoil slipped on Monday as feedstock crude prices gained, while cash premiums for the industrial fuel grade surged to their highest level in 18 months amid expectations for firmer demand this year.

Cash differentials for gasoil with 10 ppm sulphur content, which have more than trebled in December, were at a premium of 91 cents per barrel to Singapore quotes on Monday, a level last seen in June 2020.

Refining margins, also known as cracks, for 10 ppm gasoil dipped to $12.78 a barrel over Dubai crude, down from $12.83 a barrel on Friday, the last day of 2021.

Indian state refiners’ daily gasoil sales rose in December from the previous month but a rapid surge in infections due to the Omicron coronavirus variant could hit fuel demand in Asia’s third largest economy. State retailers sold about 208,150 tonnes of gasoil a day in December, up 8.75% from November and 1.48% higher than the same month last year, preliminary sales data compiled by the industry showed.

The January crack for 500 ppm Gasoil is lower at $11.60 /bbl with the 10 ppm crack at $12.60 /bbl. The regrade is at -$1.85 /bbl.

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) kicked off the year on a weaker note but the outlook remained supportive as supply struggles to keep up with firm demand, trade sources said.

VLSFO cash premiums slipped to a 1-1/2 month low of $13.84 a barrel on Monday amid weaker cargo deal values. Meanwhile, the front-month crack, which rolled into February since the previous trading session, fell to a one-month low of $13.47 a barrel above Dubai crude as oil prices firmed.

The lower crack also came as crude oil rose towards $79 a barrel on Monday, supported by tight supply and hopes of further demand recovery in 2022, spurred in part by a view that the Omicron coronavirus variant is unlikely to dampen the outlook significantly.

The January crack for 180 cst FO is lower at  -$6.45 /bbl with the visco spread at $1.60 /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.

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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