Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices broke well beyond $80 per barrel on Monday as bulls in the market cheered OPEC+’s decision to add only incrementally to its production despite the squeeze in global supplies and worsening inflation by the day.

Brent crude finished Monday’s session at $81.26 per barrel, up $1.98 or 2.5%.  Brent peaked at $81.98 during the session. It is up 57% for this year.

WTI crude settled Monday’s trade at $77.62 per barrel, up $1.74 on the day or 2.3%. Earlier in the session, it hit a seven-year high of $78.36. WTI has gained 60% this year alone.

The producer club’s decision to keep increasing oil output gradually sent prices sharply higher, adding to inflationary pressures that consuming nations fear will derail an economic recovery from the pandemic.

The decision by OPEC+ reflects “a lack of urgency within the group to ramp up output on expected surplus next year and limited capacity with key producers,” Barclays analyst Amarpreet Singh said in a note.

The overnight crude price jump “looks a bit outsized given the ministers just reaffirmed the decision announced in July but it shows how tight the market is”, Singh said.

At a global level, the death toll from the COVID-19 virus rose to 4.82 Million (+4,808 DoD) yesterday. The total number of active cases fell by 120,000 DoD at 18.21 million. (Click here for details).

Asia’s naphtha crack slipped to $130.88 a tonne from $133.63 in the last session. The prompt, inter-month spread narrowed in backwardation for a fourth straight day to $3.75 /MT.

“Downstream margins have been narrowing,” Krystal Chung, senior analyst at Refinitiv said. There is a drop in demand as a cracker is under scheduled maintenance in South Korea, Chung added.

The October crack is lower at $3.15 / bbl.

Asia’s gasoline crack rose on Monday to hit a six-week high amid optimism over loosening mobility-related curbs triggered by COVID-19 in the region.

The crack climbed to $8 a barrel, the highest since Aug. 20, from $7.85 on Friday.

The October crack is lower at $10.15 / bbl.


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

Asian refining margins for 10 ppm gasoil rose for a third straight session on Friday, surging to their strongest in more than 20 months, boosted by steady arbitrage demand from the West amid tighter supplies.

Cash differentials for gasoil with 10 ppm sulphur dipped to a more than two-week low premium of 31 cents per barrel to Singapore quotes, compared with 34 cents per barrel on Friday.

The prompt-month time spread in Singapore, which has gained about 31% in the last two weeks, traded at 47 cents per barrel on Monday.

Refining profit margins, also known as cracks, for 10 ppm gasoil surged to $13.75 per barrel over Dubai crude during Asian trading hours, a fresh peak since January 2020. They were at $13.29 per barrel at the end of last week.

Asia’s cash differentials for jet fuel were at a discount of 5 cents per barrel to Singapore quotes on Monday, compared to a discount of 4 cents per barrel a day earlier.

The October crack for 500 ppm Gasoil is higher at $11.45 /bbl with the 10 ppm crack at $ 13.45 /bbl. The regrade is at -$ 0.25 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) crack firmed on Monday amid lower regional supplies amid refinery maintenance in Japan and South Korea, trade sources said.

The front-month VLSFO crack climbed to $11.55 a barrel above Dubai crude, up from $11.17 on Friday, Refinitiv data showed.

The October crack for 180 cst FO is lower at  -$1.20 /bbl with the visco spread at $2.40 /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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