Oil prices jumped on Monday to the highest levels in years, fuelled by rebounding global demand that has contributed to power and gas shortages in key economies like China.
Brent crude rose $1.26, or 1.5%, to settle at $83.65 a barrel. The session high was $84.60, its highest since October 2018.
WTI crude gained $1.17, or 1.5%, to settle at $80.52, after touching its highest since late 2014 at $82.18.
The pace of economic recovery from the pandemic has supercharged energy demand at a time when oil output has slowed due to cutbacks from producing nations during the pandemic, focus on dividends by oil companies and pressure on governments to transition to cleaner energy.
A White House official said the Biden administration was closely monitoring the cost of oil and gasoline and “using every tool at our disposal to address anti-competitive practices in U.S. and global energy markets to ensure reliable and stable energy markets.
According to CFTC data released on Friday, net speculative long positioning in crude oil futures hit its highest in seven weeks last week, but is still barely at half the level seen in 2018 before Donald Trump started his trade war with China in earnest.
Asia’s naphtha crack surged to a two-month high on Monday, benefiting from steady demand from the petrochemical sector and high prices of rival cracker feedstock, liquefied petroleum gas.
The crack climbed to $146 a tonne, the highest level since Aug. 11, from $144.40 on Friday.
Naphtha demand remained strong from the petrochemical sector after South Korean and Japanese producers sought paraffinic grades for November delivery, according to Refinitiv Oil Research weekly report.
“The naphtha market is expected to stay firm, amid persistently high prices of LPG, rendering switching economics for crackers with a flexible configuration still unworkable ahead of the peak winter heating season,” the report added.
The November crack is lower at $4.25 / bbl.
Asia’s gasoline crack eased from a two-year peak, but remained strong above $9 a barrel as a recovery in regional demand with easing mobility curbs lifted market sentiment.
The crack slipped to $9.67 a barrel from $10.02 in the last session.
The November crack is higher at $11.55 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s middle distillate markets were firm on Monday amid signs of tightening regional supplies and recovering demand.
In particular, Asia’s jet fuel saw cash premiums and time spreads climb to their highest since early-2020 on signs of shrinking supplies and on hopes that easing regional restrictions, as well as approaching winter season, will boost demand. Exports from China were also expected to shrink as the country grapples with power shortages amid soaring gas and thermal coal prices, trade sources said.
Asia’s cash differentials for 10 ppm gasoil jumped 14 cents to a premium of 47 cents per barrel to Singapore quotes on Monday.
Asia’s cash differentials for jet fuel were at a premium of 20 cents a barrel to Singapore quotes, the highest since February 2020.
The front-month jet fuel time spread climbed to 24 cents a barrel, its highest since February 2020, and the jet crack rose to $12.82 a barrel, despite soaring crude oil prices, Refinitiv data in Eikon showed.
Singapore on Saturday announced it was opening its borders to more countries for quarantine-free travel as the city-state seeks to rebuild its status as an international aviation hub, and prepares to reach a “new normal” to live with COVID-19.
The November crack for 500 ppm Gasoil is higher at $12.90 /bbl with the 10 ppm crack at $ 14.90 /bbl. The regrade is at +$ 0.10 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) firmed on Monday on hopes that surging natural gas prices could force regional utilities to ramp up low-sulphur residual fuel consumption to meet electricity demand.
The front-month VLSFO crack jumped even as crude prices rose, climbing to a more than two-week high of $12.45 a barrel above Dubai crude. The crack was up from a more than four-month low of $10.56 on Tuesday, Refinitiv Eikon data showed.
The November crack for 180 cst FO is unchanged at -$0.95 /bbl with the visco spread at $1.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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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.