Crude prices returned to the $80 per barrel mark on Tuesday as producer alliance OPEC+ allowed another output hike in February, vindicating bets by oil longs that Covid’s Omicron variant would not hurt demand for energy any more than other known variants of the virus.
Brent crude futures settled up $1.02, or 1.3%, at $80 per barrel. Brent peaked at $80.54 during the session, responding to the OPEC+ decision.
WTI crude futures settled up $1.04, or 1.4%, at $77.12 per barrel, after hitting an intraday high of $77.64.
While we agree with the general consensus that the impact of the virus is going to be mild, we believe that demand may not return as fast as being envisaged. This is because people are simply going to be too sick to drive or travel around.
The API data shows a huge draw in crude stocks accompanied by a corresponding build in product stocks. We await the official data today.
At a global level, the death toll from the COVID-19 virus rose to 5.47 Million (+6,656 DoD) yesterday. The total number of active cases rose by 1.7 million DoD to 33.90 million. (Click here for details).
People being hospitalised with COVID-19 in the United Kingdom are broadly showing less severe symptoms than before, Britain’s vaccine minister said on Tuesday, adding there was no need for further restrictions at this stage.
Asia’s naphtha crack crack eased to $152.63 a tonne, lowest since Dec. 24, from $157.18 in the last session. The prompt inter-month spread has dropped to flat.
Naphtha flows into Asia for December closed at 6.3-6.4 million metric tonnes (mt), little changed from November levels, assessments by Refinitiv Oil Research showed.
The January crack has crashed to $ 3.70 /bbl.
Asia’s gasoline crack eased by 11 cents to $12.20 per barrel.
The January crack is lower at $12.85/ bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for jet fuel flipped to a premium on Tuesday, while the Jan/Feb time spread for the aviation fuel in Singapore widened its backwardated structure.
Cash differentials for jet fuel were at a premium of 10 cents per barrel to Singapore quotes, compared with a discount of 5 cents per barrel a day earlier.
The prompt-month spread for jet fuel traded at 61 cents per barrel on Tuesday, compared with 37 cents a barrel on Monday.
Refining margins or cracks for jet fuel rose to $10.75 per barrel over Dubai crude during Asian trading hours on Tuesday, up from $10.43 a barrel on Monday.
The jet cracks averaged $6.91 per barrel in 2021, compared with $3.02 a barrel in 2020, Refinitiv Eikon data showed.
But just when wider vaccinations and border agreements between countries were brewing hopes for international travel, the highly contagious Omicron variant of the coronavirus emerged in November, prompting reimposition of travel curbs.
The January crack for 500 ppm Gasoil has jumped to $12.85 /bbl with the 10 ppm crack at $13.85 /bbl. The regrade is at -$2.35 /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) slipped on Tuesday as feedstock crude prices edged higher, but traders expect the market to remain tight in the near term due to steady demand.
The front-month VLSFO crack dipped to $13.27 per barrel against Dubai crude during Asian trading hours, the lowest since Dec. 8. The crack was at $13.47 a barrel on Monday, after averaging $12.83 per barrel in 2021, Refinitiv data showed.
Cash premiums for Asia’s 0.5% VLSFO fell to $10.43 a tonne to Singapore quotes on Tuesday from $13.84 per tonne on Monday.
Meanwhile, Asia’s cash differentials for 180-cst high sulphur fuel oil (HSFO) were at a premium of $1.63 a tonne to Singapore quotes, up from $1.31 on Monday.
The January crack for 180 cst FO is lower at -$7.45 /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.
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.