Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

U.S. oil prices returned to near seven-year highs on Tuesday as bulls in the market seized upon the White House’s reopening of the country’s borders for international travel as a sign of explosive demand ahead for jet fuel.

Brent crude futures rose $1.35, or 1.6%, to settle at $84.78 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $2.22, or 2.7%, to settle at $84.15. They were the highest closes for both benchmarks since Oct. 26.

“With the reopening of U.S. borders for vaccinated travelers, jet fuel demand ought to receive a healthy … boost,” Tamas Varga of oil brokers PVM said in a commentary carried by Reuters.

In it’s Short Term Economic Outlook report, the EIA projected average prices for retail regular grade gasoline would decline from $3.32 per gallon in November to $3.16 in December and $3.00 in the first quarter of 2022.


The reported drawdown on crude stocks would have caught the market by surprise yesterday. However, to compensate, gasoline stocks drew less than expected, while distillate stocks actually built. As usual the market will look to the official data to be released by the DOE today.

At a global level, the death toll from the COVID-19 virus rose to 5.08 Million (+7,627 DoD) yesterday. The total number of active cases was unchanged DoD at 18.72 million. (Click here for details).

Asia’s naphtha crack rose on Tuesday, cutting losses from last three sessions amid robust feedstock demand from petrochemicals and slowing supplies from the West.

The crack rose to $169.13 per tonne from $166.33 in the last session. Naphtha margins have gained over 45% in the last two months due to higher prices of alternative cracker feedstock liquefied petroleum gas.

On supply side, total naphtha flows into Asia for November have been provisionally assessed at 6-6.5 million metric tonnes, contracting from October forecast of 6.7-6.8 million mt, according to Refinitiv Oil Research data. “While inflows from the Middle East, typically Asia’s top naphtha supply region, have surpassed the 3 million mt level for the third month in a row, the robust exports have been unable to fully mitigate the deficit in arbitrage volumes arriving this month,” Refinitiv said in a weekly report.

The December crack is higher at $ 5.35 /bbl.

Asia’s gasoline crack  inched lower but remained strong above $13 per barrel amid firm regional demand and tighter supplies.

The refining profit margin cooled to $13.29 a barrel from $13.34 in the last session.

The December crack is lower at $11.35 / bbl

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

Cash differentials for gasoil with 10 ppm sulphur content, were at a premium of 83 cents per barrel to Singapore quotes, up from 79 cents per barrel on Monday.

Cash differentials for jet fuel rose 11cents to a premium of 27 cents per barrel over Singapore quotes.

Asian refining margins for jet fuel rose on Tuesday, hovering near multi-month highs, as easing travel restrictions lift airline capacity in several countries.

Refining margins or cracks for jet fuel rose to $13.35 per barrel over Dubai crude during Asian trading hours, compared with $12.81 per barrel a day earlier.

December scheduled capacity for global airlines is currently 13% ahead of November capacity, which stands at 334 million seats as of this week, OAG data showed.

The December crack for 500 ppm Gasoil is higher at $13.40 /bbl with the 10 ppm crack at $ 14.70 /bbl. The regrade is at -$ 0.40 /bbl. 

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

Asia’s cash premiums for 0.5% very low-sulphur fuel oil (VLSFO) jumped to their highest in more than two months on Tuesday, while refining margins for the marine fuel grade hit their strongest level since February.

Cash premiums for Asia’s 0.5% VLSFO climbed to $4.44 per tonne to Singapore quotes, their highest since Aug. 24. They were at a premium of $2.95 per tonne a day earlier.

The front-month VLSFO crack jumped to $14.90 per barrel against Dubai crude during Asian trading hours on Tuesday, a level not seen since Feb. 26. The crack was at $14.47 a barrel on Monday, Refinitiv Eikon data showed.

The 380-cst HSFO barge crack for December dipped to a discount of $14.55 a barrel to Brent, compared with minus $14.21 per barrel in the previous session, Refinitiv Eikon data showed.

Asia’s cash premiums for 380-cst high sulphur fuel oil (HSFO) rose to 23 cents per tonne to Singapore quotes on Tuesday, up from 13 cents per barrel on Monday.

The December crack for 180 cst FO is lower at  -$7.70 /bbl with the visco spread at $1.40 /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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