Crude Oil
Oil prices rose 2% on Monday to their highest in over a year, with Brent nudging past $60 a barrel, boosted by supply cuts among key producers and hopes for further U.S. economic stimulus.
Brent rose $1.22, or 2.1%, to settle at $60.56 a barrel, while U.S. West Texas Intermediate rose $1.12, or 2%, to settle at $57.97 a barrel. Both benchmarks were at the highest since January 2020
In a sign that prompt supplies are tightening, the six-month Brent spread hit a high of $2.54 on Monday, its widest since January last year, a signal of demand for current supply
U.S. President Joe Biden said the United States would not lift sanctions on Iran simply to get it back to the negotiating table, while Iran’s Supreme Leader Ayatollah Ali Khamenei said all sanctions should be lifted first.
However, with a full-fledged demand recovery yet to take shape, futures may have rallied too far too fast, especially with key technical indicators signaling crude is in overbought territory. The world’s largest independent oil trader, Vitol SA, and rival Gunvor Group Ltd. both expressed caution over the recent rally.
Hedge funds have increased their exposure to diesel and moved away from gasoline amid fears personal travel and the services sector will remained depressed, purchasing the equivalent of 8 MB in the week to 2 Feb’21.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 2,335,625 (+8,187 DoD) yesterday. The total number of active cases fell by around 150,000 DoD to 25.68 million. (Click here for details)
Naphtha
Asia’s naphtha crack rose to $108.88 per tonne on Monday, up from $107.73 a tonne on Friday.
The February crack is higher at $2.05 /bbl.
The March crack is at $1.60/bbl
Gasoline
Asia’s gasoline crack inched lower on Monday, but stayed within sight of a four-month peak touched in the previous session, partly fueled by expectations for tighter supplies as regional refineries head into the spring maintenance season. The gasoline crack dipped to $4.74 per barrel on Monday, mainly due to firmer feedstock crude prices. The crack, which has gained about 34% in the past month, was at $4.83 a barrel on Friday, its highest since Oct. 6.
The February crack is lower at $4.95 /bbl.
The March crack is at $5.45 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Gasoil with 10 ppm sulphur content was at a discount of 5 cents a barrel to Singapore quotes, compared with a 4-cent discount on Friday.
Cash differentials for jet fuel were at a discount of 16 cents per barrel to Singapore quotes on Monday, compared with a 15-cent discount on Friday.
India’s diesel year-on-year sales in January fell at their slowest pace in three months, indicating a gradual recovery in industrial growth.
The February crack for 500 ppm Gasoil is higher at $6.05 /bbl with the 10 ppm crack at $ 6.90 / bbl. The regrade is at -$ 2.05 /bbl.
The March crack for 500 ppm Gasoil at $6.25 /bbl with the 10 ppm crack at $ 7.15 / bbl. The regrade is at -$ 1.75 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market continued to advance on Monday, extending sharp gains from last week with the front-month refining margin climbing to a fresh 11-month peak, despite similarly persistent gains in crude oil prices.
The strength in the low-sulphur market and the relative weakness of high-sulphur fuel oil (HSFO) have also pushed the front-month VLSFO-HSFO price differential, also known as the HiLo spread, to an 11-month high of $115 a tonne, according to Refinitiv data in Eikon. The widening HiLo price differential is expected to boost demand for scrubber-fitted ships over the near-term, though on the other hand, HSFO may be boosted by tightening supply of heavy crudes as Saudi Arabia follows through with supply cuts in February and March, the sources said.
The January crack for 180 cst FO is higher at -$2.80 /bbl with the visco spread at $1.10 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
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.