Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude prices were back to where they were on Friday — in the red — as Monday’s thin-holiday-volume boosted 3% gain was rolled back by traders who reckoned that the cut equivalent to 0.1% of global daily demand would do jack for a market more worried about the impending U.S. September rate hike and China’s COVID lockdowns.

Brent futures settled at $92.83. down $2.91, or 3.04% from Friday. For last week, Brent lost 6.4%.

WTI settled Tuesday’s trade down at $86.88 per barrel, up just a penny from Friday. Last week, WTI fell 6.7%.

Monday’s rally came in a knee-jerk reaction to OPEC+’s announcement that it would cut output by 100,000 barrels per day in October. The market’s upside seemed stretched by momentum rather than clear thinking amid thinner-than-usual holiday conditions.

The Dollar Index, which pits the greenback against the euro and five other major currencies, hit a 20-year high of 110.54 on Tuesday on continuous bets that the relatively strong US jobs report for August could embolden the Federal Reserve in carrying out its third straight 75-basis point rate hike on Sept 21.

In China, most of the 21.2 million residents of Chengdu city faced extended curbs on their movements even as the estimated 18 million in tech hub Shenzhen saw an easing of lockdown conditions imposed since Monday.

On the supply side, signs that an agreement to resurrect Iran’s nuclear deal with world powers was less imminent challenged crude prices by reducing the odds that OPEC+ would move forward with its output reduction plan, said Bob Yawger, director of energy futures at Mizuho.

 

Asia’s naphtha refining profit margin gained on Tuesday after Brent crude oil prices weakened, although the crack continued to trade in the red amid persisting weak petrochemical demand. The discount on naphtha crack reduced to $39.35 a tonne from $50.90 a tonne on Monday.

On the supply side, total naphtha inflows into Asia last month declined to 6 million-6.1 million tonnes from July’s revised total of nearly 6.2 million tonnes, according to Refinitiv Oil Research data. Data showed the drop was primarily caused by a slowdown in shipments from the region’s top naphtha exporter India. Volumes from the country tumbled to a seven-month low of 400,000 tonnes in August.

The September crack is higher at -$ -20.10 per barrel 

Asia’s refining profit margin for gasoline continued its recovery on Tuesday, rising $1.35 per barrel to $6.14 per barrel.

The September crack is higher at $4.45 per barrel.

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

Asia’s refining margins for gasoil with 10 ppm sulphur content dipped on Tuesday on weakened demand sentiment as some lockdown measures in top consumer China are set to continue.

Cash differentials for 10 ppm gasoil stood at a premium of $1.64 a barrel to Singapore quotes, down from $1.68 in the previous session.

Refining margins for 10 ppm gasoil fell to $46.49 a barrel over Dubai crude in Asian trading hours, compared with $47.86 on Monday.

Cash differentials for jet dropped back to a premium of $2.62 a barrel to Singapore quotes, after spiking to a premium of $3.66 a barrel in the previous session.

Refining margins for jet fell to $39.82 a barrel over Dubai crude during Asian trading hours, compared with $41.36 on Monday.

The September crack for 500 ppm Gasoil is lower at $40.40 /bbl with the 10 ppm crack $45.40 /bbl. The 10 ppm regrade is at -$7.70 /bbl.

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

A downtrend in cash differentials for very low sulphur fuel oil (VLSFO) had paused as of Tuesday, though abundant supplies are likely to cap further uptick in the near term.

The cash differential for 0.5% very low sulphur fuel oil rebounded slightly from the previous day to a premium of 59 cents per tonne on Tuesday, halting a 13-session decline. The differential had fallen to near parity to Singapore quotes on Monday.

Meanwhile, the high sulphur fuel oil (HSFO) market was little changed on Tuesday after trading momentum cooled off from the previous day.

The 380-cst HSFO cash differential dropped 75 cents day-on-day to a premium of $2.25 per tonne over Singapore quotes, while the 180-cst HSFO cash differential fell 36 cents to a premium of $7.23 per tonne over the same period.

In contrast, the VLSFO market remained under downward pressure as bearish fundamentals extended into September.

The September crack for 180 cst FO is higher at – $23.80 /bbl with the visco spread at $4.70 /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.

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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