Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

The U.S. oil rally seems to be hitting a bit of a wall beyond $70 per barrel.

Brent crude  settled settled settled up 30 cents at $72.52 per barrel. Brent hit $72.90 earlier in the session, its highest since May 2019.

WTI futures settled settled up 33 cents, or 0.5%, at $70.29 per barrel. Its session high was $70.64. Since June 1, WTI has set new intraday highs going back to October 2018. But its climb has significantly slowed since getting past the $70 mark.

OPEC stuck to its prediction of a strong world oil demand recovery in 2021, of +5.95 MMB/D YoY, led by the US and China despite uncertainties stemming from the pandemic, pointing to a need for more oil from the producer group.

 OPEC kingpin Saudi Arabia self-reported crude oil production of 8.544 MMB/D for May’21, indicating it has unwound its voluntary extra output cut at a faster pace than it originally announced.

US crude exports are expected to shrink in Jun’21 due to muted demand and poor profitability for shipping oil overseas, traders and shipbrokers said. American crude exports have averaged about 3 MMB/D so far this year.

At a global level, the death toll from the COVID-19 virus rose to 3.79 Million (+11,400 DoD) yesterday. The total number of active cases rose fell by around 60,000 DoD to 12.36 million. (Click here for details).

Asia’s naphtha crack extended declines on Thursday, falling to a two-week low, after cracker turnarounds in north Asia as well as firmer crude oil prices tempered near-term demand expectations, trade sources said.

The naphtha crack fell to $100.25 a tonne on Thursday, down from $104.80 a tonne in the previous session and its lowest since May 27.

The potential for increased naphtha exports from India amid easing restrictions also dampened sentiment.

The July crack is lower at $0.10 / bbl

Asia’s gasoline crack fell to $5.05 a barrel on Thursday, from $5.72 a barrel on Wednesday, after U.S. inventory data pointed to weak consumer fuel demand.

Exports of gasoline and blend stocks from Asia to the US rebounded in May’21 from Apr’21, including two rare shipments from India, to meet rising summer demand in the west, industry sources and analysts told Reuters.

Singapore’s light distillate inventories dropped 11% to a five-week low of 12.11 million barrels in the week to June 9, according to Enterprise Singapore data.

The July crack is higher at 8.55 / bbl

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

Asian refining margins for 10 ppm gasoil slipped on Wednesday, while cash discounts for the industrial fuel widened due to sluggish demand in the physical market.

Cash differentials for gasoil with 10 ppm sulphur content were 5 cent lower at a discount of 10 cents per barrel to Singapore quotes on Thursday. 

Singapore’s middle distillate inventories slipped 1.7% to 11.3 million barrels in the week to June 9, a level not seen since February last year, according to Enterprise Singapore data.

Cash discounts for jet fuel widened by a cent to 41 cents per barrel to Singapore quotes on Thursday.

The Asian aviation sector is seeing further headwinds with regional carriers cutting capacity in Jun’21, to 37.3% below 2019 levels, as demand evaporates due to rising coronavirus infections, OAG said 10 Jun’21.

The July crack for 500 ppm Gasoil is higher at $7.50 /bbl with the 10 ppm crack at $ 8.90 /bbl. The regrade is at -$ 0.90 /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 slumped on Thursday as inventories in the Singapore bunkering and trading hub climbed to near multi-year highs earlier in May.

Front-month VLSFO time-spreads dipped into contango of 25 cents per tonne on Thursday, down from a backwardation of 25 cents in the previous session, Refinitiv data in Eikon showed.

Singapore fuel oil stocks rose by 1.32 million barrels, or about 209,000 tonnes, to a five-week high of 26.92 million barrels, or 4.24 million tonnes, Enterprise Singapore data showed. The fuel oil stocks were near a more than four-year high of 27.23 million barrels recorded at the start of May.

The June crack for 180 cst FO is higher at  -$7.30 /bbl with the visco spread at $1.25 /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.

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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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