Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices rose on Friday on expectations that OPEC+ will discuss output cuts at a meeting on Sept. 5, though concern over China’s COVID-19 curbs and weakness in the global economy loomed over the market.

Brent futures did a final trade of $93.28 after settling Friday’s trade up 66 cents, or 0.7%, at $93.02. The session high was $95.28. Brent was down in three prior sessions, losing 4.5% on Thursday, 2.8% on Wednesday, and 5% on Tuesday. For the week, it fell 6.4%.

WTI did a final trade of $87.25 a barrel after settling the session up 26 cents, or 0.3%, at $86.87. WTI’s session peak was $89.61. Like Brent, WTI was down in three prior sessions, losing 3.3% on Thursday, 2.3% on Wednesday, and 5.5% on Tuesday. That left the U.S. crude benchmark down 6.7% for the week

The OPEC+ group, which meets today, is likely to keep oil output quotas unchanged for October, three OPEC+ sources said, although some sources would not rule out a production cut to bolster prices that have slid from sky-high levels hit earlier this year.

Meanwhile, Iran said it had sent a “constructive” response to U.S. proposals aimed at reviving Tehran’s 2015 nuclear deal with world powers. The United States gave a less positive assessment.

G7 finance ministers agreed on Friday to impose a price cap on Russian oil, but provided few new details to the plan aimed at curbing revenue for Moscow’s war in Ukraine while keeping crude flowing to avoid price spikes.

In the United States, employers hired more workers than expected in August, but moderate wage growth and a rise in the unemployment rate to 3.7% could ease pressure on the Federal Reserve to deliver a third 75 basis-point interest rate hike this month.

U.S. energy firms this week cut the number of oil and rigs operating for the fourth time in five weeks. The U.S. oil rig count, an early indicator of future output, fell by nine to 595 in the week to Sept. 2, Baker Hughes Co said on Friday.

Money managers cut their net long U.S. crude futures and options positions by 10,607 contracts to 168,431 in the week to Aug. 30, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Asia’s naphtha crack continued its recoveries, notwithstanding the strength in crude prices. The margin stood at a discount of $42.70 a tonne from a discount of $57.63 a day earlier.

ARA Naphtha inventories dropped to 394,000 tonnes from 456,000 tonnes in the previous week.

The September crack is lower at -$ -20.30 per barrel 

Asia’s gasoline crack recovered losses on Friday, settling at a a premium of $3.34 a barrel on Friday, up from March 2020 lows touched a day earlier at a discount of 45 cents a barrel.

ndonesia’s state-owned oil giant Pertamina, Asia’s biggest gasoline importer, has deferred some of its gasoline deliveries for September ahead of planned government cuts to fuel subsidies which are likely to hit demand, market sources said. The country has likely deferred gasoline cargoes of roughly 1.2 million barrels, a source with knowledge of the matter said. Revised imports would be around 7 million-8 million barrels in September, he added.

ARA Gasoline inventories  fell by 13% to 1.319 million tonnes in the week to Thursday, Insight Global data showed.

The September crack is higher at $3.60 per barrel.

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

Asia’s cash premiums for gasoil with 10 ppm sulphur content weakened on Friday as markets continued to digest dented demand sentiment following fresh lockdowns in top consumer China.

Cash differentials for 10 ppm gasoil stood at a premium of $1.77 a barrel to Singapore quotes, down from $1.95 in the previous session, and posting a weekly loss of over 2%.

Latest data indicates China’s apparent gasoil demand fell 4% month-on-month to 1 million mt in July as a result of pandemic-enforced lockdowns, Refinitiv Oil Research wrote in a monthly report.

Cash differentials for jet dipped to a premium of $2.39 a barrel to Singapore quotes, down from a premium of $2.44 a barrel in the previous session.

ARA Gasoil stocks rose to 1.702 million tonnes in the week to Thursday from 1.696 million tonnes in the prior week, Insights Global data showed. Jet fuel stocks at declined to 727,000 tonnes in the week to Sept. 1 from 802,000 tonnes in the prior week.

The September crack for 500 ppm Gasoil is higher at $44.85 /bbl with the 10 ppm crack $49.85 /bbl. The 10 ppm regrade is at -$7.20 /bbl.

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

Refining margins for 180-cst high sulphur fuel oil remained weak on Friday despite an uptick in cash differentials over recent trading sessions.

The front-month crack was at a discount of $20.60 per barrel at the Asia close (0830 GMT) on Friday, declining further compared to an average discount of $16.59 per barrel over last month, based on Refinitiv data.

The 180-cst HSFO cash differential rose $3.00 to a premium of $7.93 per tonne. The 380-cst HSFO cash differential continued to hover in small single digits over Singapore quotes this week, dipping 16 cents to a premium of $2.27 per tonne.

The cash differential for 0.5% very low sulphur fuel oil slid to its lowest in 14 months, falling 63 cents to a premium of 78 cents per tonne on Friday.

ARA fuel oil inventories fell 10% to 1.14 million tonnes in the week ended Sept. 1, latest data from Dutch consultancy Insights Global showed.

The September crack for 180 cst FO is lower at – $23.20 /bbl with the visco spread at $4.75 /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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