Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices pulled back on Monday after touching two-year highs on expectations of improved demand and OPEC producers keeping supply curbs in place.

Brent crude  settled at $71.49 a barrel, falling 40 cents after hitting $72.27 a barrel, its highest since May 2019.

WTI futures settled 18 cents lower at $69.23 a barrel after touching $70 for the first time since October 2018.

Crude has risen for two weeks, with Brent up by 38% this year and WTI rising 43%, helped by nascent recovery from pandemic-related demand disruptions and supply curbs by the OPEC + group.

China’s crude oil imports fell 14.6% MoM in May’21 to 40.97 MMT (~9.65 MMB/D), with daily arrivals hitting the lowest level this year, as maintenance at refineries limited consumption, but utilization rates are expected to rebound in coming months.

Portfolio managers increased their positions, reversing roughly half the sales over the previous three weeks, buying the equivalent of 40 MMB in the week to 1 Jun’21, as benchmark oil prices started to break up through the recent ceiling.

At a global level, the death toll from the COVID-19 virus rose to 3.75 Million (+7,800 DoD) yesterday. The total number of active cases rose fell by around 270,000 DoD to 12.72 million. (Click here for details).

Asia’s naphtha crack climbed to a more than two-month high of $106.50 per tonne on Monday, its highest since March 26.

The naphtha crack has climbed for four straight sessions, buoyed by expectations of an improvement in near-term demand from South Korea and lower arbitrage supplies in June.

Total naphtha flows into Asia for June have been provisionally assessed at 5 to 5.5 million tonnes, according to Refinitiv Oil Research assessments released on Monday. This is sharply lower than May forecast of 6.2 to 6.3 million tonnes and falling under the year-to-date monthly average of similar levels, the assessments showed.

The June crack is higher at $ 0.35 /bbl. The July crack is at $0.60 / bbl

Asia’s gasoline crack also firmed on Monday, as optimism over rising demand in the United States and Europe outweighed concerns of weak demand in Asia amid persistent coronavirus-led mobility restrictions.

Asia’s gasoline crack climbed 31 cents to a six-session high of $5.18 per barrel.

The June crack is lower at $6.75 /bbl. The July crack is at 8.15 / bbl

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

Cash differentials for gasoil with 10 ppm sulphur content remained unchanged at 7 cents per barrel to Singapore quotes on Monday. 

The June/July time spread for the benchmark gasoil grade in Singapore narrowed its backwardation to trade at 5 cents per barrel.

India’s gasoil exports rebounded to 2.58 million tonnes in May, about 39% higher compared with April volumes, Refinitiv Oil Research assessments showed.

Cash discounts for jet fuel narrowed by 5 cents to 45 cents per barrel to Singapore quotes on Monday.

Global scheduled airline capacity was 0.7% higher WoW at 68.4 million seats for the week started 7 Jun’21, as major regions apart from Asia posted mild gains, according to OAG. However, global seat capacity has only recovered to 64.1% of Jan’20 levels.

The June crack for 500 ppm Gasoil is lower at $6.05 /bbl with the 10 ppm crack at $ 7.85 /bbl. The regrade is at -$ 1.30 /bbl. 

The July crack for 500 ppm Gasoil is at $7.30 /bbl with the 10 ppm crack at $ 8.70 /bbl. The regrade is at -$ 1.25 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market complex was broadly lower on Monday amid limited trade activity.

The prompt-month VLSFO time spread fell 25 cents to minus 75 a tonne on Monday while firmer crude oil prices helped push the July crack 18 cents lower to $12.55 a barrel against Dubai crude.

China’s independent refineries rushed to shop at least 210 KT of SRFO to secure adequate feedstock barrels as they will be short of imported crude oil quotas in 2H’21, refinery and trade sources told S&P Global Platts 5-6 Jun’21.

The June crack for 180 cst FO is lower at  -$6.55 /bbl with the visco spread at $1.05 /bbl.

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

No fresh action 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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