Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices tumbled on Tuesday in a volatile session after OPEC producers canceled a meeting when major players were unable to come to an agreement to increase supply.

Brent Crude  settled down $2.63, or 3.4%, to $74.53 a barrel, after hitting a session peak of $77.84, its highest since October 2018.

WTI crude futures settled down $1.79, or 2.4%, to $73.37 after touching $76.98, highest since November 2014. 

Saudi Arabia has raised the Aug’21 OSPs of all crude grades it sells to Asia, the country’s state oil producer Aramco said on Tuesday.

Iran has begun the process of producing enriched uranium metal, the IAEA said on Tuesday, a move that could help it develop a nuclear weapon and threatened talks to revive the 2015 Iran nuclear deal.

Tropical Storm Elsa strengthened into a Category 1 hurricane on Tuesday, hours before an expected landfall on Florida’s northern Gulf Coast, the US National Hurricane Center said.

At a global level, the death toll from the COVID-19 virus rose to 4.01 Million (+7,984 DoD) yesterday. The total number of active cases rose by 10,000 DoD to 11.64 million. (Click here for details).

Britain reported the highest daily number of new COVID cases (28,773) since 29 Jan’21 on Tuesday, and the greatest number of deaths within 28 days of a positive test (37) since 23 Apr’21.

Asia’s naphtha crack rose for a sixth straight session on Tuesday, scaling fresh highs on signs of recovering demand and shrinking supplies.

The naphtha crack climbed to $130.88 on Tuesday, up from $127.58 per tonne on Monday and its highest since December 2017.

“Furthermore, a spike in prices of rival cracker feedstock liquefied petroleum gas is likely to spur petrochemical producers to maximize naphtha in the feedstock slate,” Refinitiv Oil Research said in its latest weekly flows report.

Total naphtha flows into Asia for July have been provisionally assessed at 6 million to 6.5 million tonnes, according to assessments by Refinitiv Oil Research. The volumes are up from a June forecast of 5.8 million to 5.9 million but steady-to-higher versus the year-to-date monthly average of about 6.15 million tonnes, according to the assessments.

The July crack is lower at $2.15 / bbl

The August crack is at $2.60 / bbl

Asia’s gasoline crack climbed to a fresh high of $9.35 a barrel on Tuesday, the highest since February 2020 and up from $9.10 per barrel in the previous session.

The July crack is higher at 10.75 / bbl

The August crack is at 11.05 / bbl

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

Cash differentials for 10 ppm gasoil were 3 cents lower at discount of 13 cents per barrel to Singapore quotes on Monday.

The July/August spread for the fuel grade widened its backwardation by 3 cents to 11 cents per barrel on Monday, while the front-month spread traded at 12 cents per barrel.

India’s gasoil sales in June rose 18.5% from May due to an uptick in economic activity after some COVID-19 lockdowns were eased, but the country’s diesel demand typically takes a hit during the peak monsoon season, which is due shortly.

Cash differentials for jet fuel narrowed by 4 cents to 43 cents per barrel to Singapore quotes on Tuesday, while the July/August time spread stayed in a contango structure to trade at minus 32 cents per barrel.

Scheduled capacity for global airlines have improved 4.1% in the week to Monday as carriers added 3.1 million seats, aviation data firm OAG said in a statement. China added 1.4 million seats this week, pushing its capacity 8.7% higher from a week earlier, and 3% higher compared with the corresponding week in pre-pandemic 2019, while scheduled seats in India were up 4% from the previous week, OAG data showed.

India’s aviation ministry said on Monday it has now allowed the country’s domestic flight capacity to be increased to 65% from 50% earlier, till July-end.

The July crack for 500 ppm Gasoil is lower at $4.95 /bbl with the 10 ppm crack at $ 6.95 /bbl. The regrade is at -$ 0.65 /bbl. 

The August crack for 500 ppm Gasoil is at $6.25 /bbl with the 10 ppm crack at $ 8.25 /bbl. The regrade is at -$ 0.25 /bbl. 

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

Cash premiums for Asia’s high-sulphur fuel oil (HSFO) dipped on Tuesday, ending a recent surge in cash differentials for cargoes of both 180-cst and 380-cst HSFO as buying interest waned.

Cash premiums for 180-cst HSFO dipped 24 cents to $2.26 a tonne to Singapore quotes on Tuesday, while cash premiums for 380-cst HSFO were at $1.33 a tonne, down 32 cents from the previous session.

Weaker 380-cst HSFO forward prices relative to those of 0.5% very low-sulphur fuel oil (VLSFO) helped push the sulphur spread, also known as the HiLo spread, for August to a more than four-month high of $124.50 a tonne, Refinitiv data in Eikon showed.

The July crack for 180 cst FO is lower at  -$7.30 /bbl with the visco spread at $1.50 /bbl.

The August crack for 180 cst FO is at  -$6.65 /bbl with the visco spread at $1.20 /bbl.

Click Here for a graphical depiction of Fuel Oil stocks by region.

The August gasoline crack has jumped up to 11.30 /bbl. We shall add one more tranche to our hedge of gasoline today. We shall also hedge the August Jap Nap crack should that cross $2.80 / bbl 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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