Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude prices dipped Friday as longs in the market took some profit after a four day run-up, but the week was still a big one for oil bulls enthused by OPEC’s decision to raise output in a market still troubled by the impact of Covid variants on the global economy.

Brent crude futures slipped 24 cents, or 0.3%, to settle Friday at $81.75 per barrel. For the week, Brent rose more than 5%, rising for a third week in a row  in a run-up that has delivered about 10% in all.

WTI crude futures settled down 56 cents, or 0.7%, on the day at $78.90 per barrel. For the week, WTI rose just over 5%, also gaining for a third straight week in a rally that has delivered about 10% in all.

An underwhelming U.S. jobs report for December — with just 199,000 positions being added versus expectations for 450,000 — also weighed on the latest trading session in oil, although the country itself was near the Federal Reserve’s definition of “maximum employment” with a jobless rate just shy of 4%.

In Kazakhstan’s main city Almaty, security forces appeared to be in control of the streets and the president said constitutional order had mostly been restored, a day after Russia sent troops to put down an uprising.

OPEC’s output in December rose by 70,000 bpd from the previous month, versus the 253,000 bpd increase allowed under the OPEC+ supply deal which restored output slashed in 2020 when demand collapsed under COVID-19 lockdowns.

U.S. oil rigs rose one to 481 this week, their highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report.

At a global level, the death toll from the COVID-19 virus rose to 5.51 Million (+5,230 DoD) yesterday. The total number of active cases rose by 1.3 million DoD to 42.5 million. (Click here for details).

Asia’s naphtha crack climbed on Friday, snapping a four-day losing streak, after prices found support from rising crude oil benchmarks, although increasing European inventories limited gains.

The refining profit margin rose to $132.75 a tonne, up $3.40 from the last close. However, naphtha margins posted a loss of more than 19% this week on demand concerns.

Naphtha inventories at Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area rose 45% to 237,000 tonnes last week, data from Dutch consultancy Insights Global showed on Thursday.

The February crack is higher at $2.70 per barrel. 

Asia’s gasoline crack eased to $10.67 a barrel from $11.23 in the last session. The crack registered a weekly loss of more than 4% as Omicron cases surged across the globe and dented consumption sentiment.

Gasoline inventories at Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area increased by almost 10% to 1.098 million tonnes last week, data from Dutch consultancy Insights Global showed on Thursday.

The February crack is higher at 11.80 /bbl.

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

Cash premiums for gasoil with 10 ppm sulphur content were at 86 cents per barrel to Singapore quotes on Friday, compared with 94 cents per barrel a day earlier.

Asian refining profit margins for 10 ppm gasoil surged to their highest level in nearly two months on Friday, supported by tighter regional supplies due to lower exports from India, China and South Korea.

Despite firmer raw material crude prices, refining margins or cracks for 10 ppm gasoil climbed for a fourth consecutive session to $14.08 a barrel over Dubai crude during Asian trade, their strongest since Nov. 10.

Cracks for the benchmark gasoil grade in Singapore has gained about 10% this week, their first weekly rise in four.

Expectations for a gradual recovery in industrial demand this year, coupled with China’s lower allotment for refined fuel export quotas, were boosting the gasoil market sentiment, traders said.

China’s diesel exports dropped to 220,000 tonnes in December, down from 599,000 tonnes in November, Refinitiv Oil Research assessments showed.

India’s December exports were assessed at 2.4 million tonnes, down from 2.8 million tonnes in the previous month, while South Korea’s exports fell to a near one-year low of 1.7 million tonnes last month, Refinitiv data showed.

Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose 1% to 1.8 million tonnes in the week ended Jan. 6, according to Dutch consultancy Insights Global. ARA jet fuel inventories slipped 0.3% this week to 896,000 tonnes.

The February crack for 500 ppm Gasoil is higher at $13.50 /bbl with the 10 ppm crack at $14.50 /bbl. The regrade is at -$1.45 /bbl.

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

The market for Asia’s 0.5% very low-sulphur fuel oil (VLSFO) gained on Friday amid signs of persistent shortages due to tight crude supplies and as refiners focus on increasing output of higher value refined fuels.

Friday’s gains helped the VLSFO market recoup recent losses, ending the week on a slightly firmer note.

Residual fuel inventories at the Amsterdam-Rotterdam-Antwerp (ARA) storage hub were little changed at a four-week high this week, while those in the Singapore and Fujairah hubs rose, industry data showed.

Fuel oil stocks in the ARA refining and storage rose 2,000 tonnes to 1.17 million tonnes in the week ended Jan. 6, data from Dutch consultancy Insights Global (IG) showed.

Compared with last year, the inventories at the ARA hub were 6% higher and above the five-year seasonal average of 1.08 million tonnes.

The February crack for 180 cst FO is higher at  -$6.90 /bbl with the visco spread at $1.25 /bbl.

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

No fresh action 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.

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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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