Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices fell about 1% on Friday after an abysmal U.S. jobs report for August, although the bottomside for crude was limited by speculation that the Federal Reserve will hold off from tapering the stimulus it was providing the Covid-restrained economy.

Brent Crude futures settled at $72.61 per barrel, down 42 cents, or 0.6%, on the day. For the week, Brent lost just 0.1%.

U.S. West Texas Intermediate oil settled the day at $69.29 per barrel, down 70 cents, or 1%. For the week, WTI rose 0.8%.

Oil prices extended losses on Monday after the world’s top exporter Saudi Arabia slashed crude prices for Asia over the weekend, signalling that global markets are well supplied.

The deep price cuts come as lockdowns across Asia to combat the highly infectious delta variant of the coronavirus have capped fuel demand in the region. Global oil supplies are also increasing as the Organization of the Petroleum Exporting Countries and their allies, a grouping known as OPEC+, is raising output by 400,000 barrels per day a month between August and December.

The OSP of Arab Light crude for delivery to Asia in October was reduced to a premium of $1.70 per barrel versus the average of DME Oman and Platts Dubai crudes, according to a company pricing document. The price differential in September was a premium of $3 per barrel, the highest since February 2020.

Brent crude futures for November fell 57 cents, or 0.8%, to $72.04 a barrel by 0101 GMT while U.S. West Texas Intermediate crude for October was at $68.73 a barrel, down 56 cents, or 0.8%.

The U.S. government is releasing crude from strategic petroleum reserves as production in the U.S. Gulf Coast struggled to recover. Some 1.7 million barrels of oil and 1.99 billion cubic feet natural gas output remained offline, government data released on Friday showed, while power shortages are preventing some refineries from resuming operations.

The hurricane also led U.S. energy firms to cut last week the number of oil and natural gas rigs operating for the first time in five weeks, data from Baker Hughes showed on Friday. The oil rig count alone fell by 16 to 394, the largest drop since June 2020.

At a global level, the death toll from the COVID-19 virus rose to 4.58 Million (+6,608 DoD) yesterday. The total number of active cases dropped by 200,000 DoD to 18.93 million
. (Click here for details). We hope that this is a sign that the infectiousness has peaked out and we will soon see returns to significantly lower levels.

Asia’s naphtha crack recouped losses on Friday, posting a weekly gain after data showed a decline in European stocks.

The crack rose to $125.35 a tonne from $119 in the previous session, while the prompt inter-month spread widened in backwardation to $4.25 per tonne.

Indicating strong demand, naphtha stocks at Europe’s ARA hub fell to 293,000 tonnes from prior week’s 386,000 tonnes, data from Dutch consultancy Insights Global showed.

The September crack is higher at $3.80 / bbl.

The October crack is at $3.70 / bbl.

Asia’s gasoline crack also gained supported by decline at ARA inventories, while a series of trades on window lifted prices for the 95-octane grade.

The crack rose to $7.28 a barrel from $6.60 in the last session after staying below $7 for five sessions.

Gasoline stocks at Europe’s ARA refining and storage area declined by 3% to 665,000 tonnes in the week to Thursday.

The September crack is higher at $9.30 / bbl.

The September crack is at $8.85 / bbl.



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

Asia’s cash premiums for 10 ppm gasoil rose for a fourth consecutive session on Friday, soaring to their highest level in over a year, buoyed by active buying interests in the physical market and strong arbitrage demand from Europe.

Cash differentials for gasoil with 10 ppm sulphur surged to a premium of 31 cents per barrel to Singapore quotes, a level not seen since late-July 2020.

Refining profit margins for 10 ppm gasoil jumped 30 cents to $9.81 per barrel over Dubai crude during Asian trading hours, their strongest since end-March last year

Gasoil stocks held independently in ARA slipped 0.2% to 2.06 million tonnes in the week ended Sept. 2, according to Dutch consultancy Insights Global.

Cash differentials for jet fuel dropped by 3 cents to a discount of 26 cents per barrel to Singapore quotes on Friday. These are the highest discount levels since July 21.

Asia’s cash differentials for jet fuel weakened on Thursday to their widest discounts in over six weeks, weighed down by frail buying interests in the physical market. Refining margins for jet fuel or cracks slipped to $6.87 per barrel over Dubai crude during Asian trading hours on Thursday, down from a multi-month peak of $7.01 per barrel on Wednesday.

Scheduled seat capacity in India rose by 129,000 seats or 4.5% this week, while flight capacity in China and Australia gained 11.7% and 4.7%, respectively, in the week to Monday, according to aviation data firm OAG. But global airlines in August have removed almost 100 million seats from their schedule for the August-December period with a majority of the capacity reduction driven by the Asia Pacific region, OAG said.

Global air cargo demand, however, provides some support to the struggling industry. The freight demand was up 8.6% in July compared with the corresponding month in pre-pandemic 2019, the International Air Transport Association (IATA) said on Tuesday.

The September crack for 500 ppm Gasoil is higher at $8.30 /bbl with the 10 ppm crack at $ 9.80 /bbl. The regrade is at -$ 1.05 /bbl. 

The October crack for 500 ppm Gasoil is at $8.50 /bbl with the 10 ppm crack at $ 10.00 /bbl. The regrade is at -$ 1.05 /bbl. 

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

Asia’s 180-cst high-sulphur fuel oil (HSFO) market firmed on Friday amid sustained strong utility demand for cargoes of the fuel.

Despite absent trade activity, the cash differential for 180-cst HSFO climbed to a four session high of $12.12 a tonne to Singapore quotes, while the prompt-month time spread rose to a more than 1-1/2 year high of $14.75 a tonne.

Fuel oil stocks in the ARA refining and storage fell by 18,000 tonnes to a five week low of 1.18 million tonnes in the week ended Sept. 2, data from Dutch consultancy Insights Global (IG) showed.

Onshore fuel oil stocks fell by 483,000 barrels, or about 76,000 tonnes, to 20.7 million barrels, or 3.26 million tonnes, their lowest since the week ended Feb. 24, according to Enterprise Singapore data.

The September crack for 180 cst FO is higher at  -$1.70 /bbl with the visco spread at $2.35 /bbl.

The September crack for 180 cst FO is at  -$3.80 /bbl with the visco spread at $1.60 /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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