Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices recovered from a two-day plunge on Wednesday after data showed a seventh weekly drawdown in U.S. crude inventories.

Brent Crude settled up 69 cents, or 0.9%, at $74.12 per barrel. Brent lost almost 5% between Monday and Tuesday.

WTI crude futures settled up 74 cents, at $72.94 a barrel. WTI lost a combined 5.5% in two previous sessions on concerns of disunity within the OPEC+ that groups the Saudi-led Organization of the Petroleum Exporting Countries and 10 other oil producers led by Russia.

Howver, the market’s upside was limited by worries that global producers may pump beyond agreed quotas as trouble festered within the OPEC+ cartel. Worries that the Delta variant of the Covid-19 may lead to another major breakout of the virus also triggered a risk-off element across markets.

OPEC’s 13 members pumped 26.19 MMB/D in Jun’21, up 480 KB/D MoM, while the group’s nine non-OPEC partners, led by Russia, produced 13.27 MMB/D, up 60 KB/D, according to the latest S&P Global Platts survey.

Kuwait has set the Aug’21 OSPs for Kuwait Export Crude (KEC) at $2.05/bbl above the average of DME Oman and Platts Dubai quotes for Asian refiners, up 80c/bbl from the previous month, a pricing document showed on Friday.

PDVSA has started producing two upgraded crude grades for domestic refining, aiming at reanimating the country’s much-needed output of motor fuels, according to a company document and sources close to the decision.

Operations at Dubai’s Jebel Ali port have returned to normal service, following an explosion and fire on the container ship Ocean Trader overnight, the UAE energy minister said in a statement 8 Jul’21. 

DOE data

The DOE reported massive draws in both crude and gasoline stocks which led to an upbeat market. The draws were arguably supported by an amazing rise in gasoline demand to over 10 million barrels for the first time ever.

However, our material balance statement appears to tell a different story.

In the first place, crude production increased by 300 kbpd to a multi month high of 11.3 mbpd. Secondly net imports increased by around 550 kbpd. Given the drop in run rates, there should have been a build of the order of 7 million barrels. This is the second time in 3 weeks that this anomaly is being seen. We would brace for a massive drop some time.

Likewise, if we see the material balance in gasoline stocks, it shows a nominal drop in stocks of around 575 kb. So we are very circumspect about the reporting.

At a global level, the death toll from the COVID-19 virus rose to 4.03 Million (+8,410 DoD) yesterday. The total number of active cases shot up by 100,000 DoD to 11.83 million. (Click here for details).

There is definitely a steady increase in the growth of active cases over the past week. 

Asia’s naphtha crack was largely steady at $123 a tonne, up 40 cents from Wednesday.

The July crack is higher at $2.45 / bbl

The August crack is at $2.80 / bbl

Asia’s gasoline crack extended declines on Thursday as Singapore light distillate inventories jumped while concerns mount over the potential for high crude oil prices to hamper a recovery in regional demand for motor fuel.

The crack fell to $8.14 a barrel on Thursday, down from $8.83 in the previous session.

Singapore’s light distillate inventories jumped 12% to their highest in nearly three months at 14.25 million barrels in the week to July 7, Enterprise Singapore data showed. The inventories were last higher in the week to April 14 and were slightly above the 2021 weekly average of 14.18 million barrels, the data showed.

The July crack is lower at 10.25 / bbl

The August crack is at 10.50 / bbl

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

Cash differentials for 10 ppm gasoil, which have stayed in a negative territory for the last three weeks, were at a discount of 15 cents per barrel on Thursday, compared with an 11-cent discount a day earlier.

Singapore’s middle distillate inventories fell 15.9% to 11.6 million barrels in the week to July 7, according to Enterprise Singapore data. Weekly Singapore middle distillate inventories have averaged 13.6 million barrels this year, compared with an average of 13.9 million barrels in 2020, Reuters calculations showed. This week’s stocks were nearly 15% lower than a year earlier.

Cash differentials for jet fuel widened were unchanged at a discount of 45 cents per barrel to Singapore quotes on Thursday.

The July crack for 500 ppm Gasoil is lower at $5.25 /bbl with the 10 ppm crack at $7.25 /bbl. The regrade is at -$ 0.60 /bbl. 

The August crack for 500 ppm Gasoil is at $6.45 /bbl with the 10 ppm crack at $ 8.45 /bbl. The regrade is at -$ 0.15 /bbl. 

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

Cash differentials and front-month time spreads for Asia’s 0.5% very low-sulphur fuel oil (VLSFO) firmed on Thursday after Singapore dropped to their lowest levels since late-March.

The VLSFO cash premium rose to a 2-1/2 month high of $1.25 a tonne to Singapore quotes on Thursday while Refinitiv data in Eikon showed the front-month time spread climb to a near three-month high of $2 a tonne.

Singapore residual fuel oil inventories fell 5%, 1.13 million barrels, or about 178,000 tonnes, to 22.82 million barrels, or 3.59 million tonnes, Enterprise Singapore data showed. Compared with a year earlier, the residual fuel stocks were 14% lower and below the 2021 weekly average of 23.25 million barrels.

The July crack for 180 cst FO is higher at  -$6.95 /bbl with the visco spread at $1.35 /bbl.

The August crack for 180 cst FO is at  -$6.25 /bbl with the visco spread at $1.20 /bbl.

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

No fresh trades 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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