Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude prices fell as much as 1% on Monday after swinging on reports of U.K.’s first death from the Omicron variant of Covid and Saudi Energy Minister Abdulaziz bin Salman’s bid to instill confidence in demand for oil.

Brent crude futures settled down 76 cents, or 1%, at $74.39 per barrel, after a high of $76.38 and bottom of $74.21. Brent rose 7.7% last week. Prior to that, it fell to a four-month low of $65.80, from a 2014 high of $86.70 in mid-October.

WTI crude futures settled down 38 cents, or 0.5%, at $71.29 a barrel, after oscillating between a session peak of $73 and low of $70.56. WTI gained 8.1% last week. Prior to that, it hit a four-month low of $62.48 on Omicron-related fears, after a seven-year high of $85.41 in mid-October.

Crude prices, which rallied more than 2% earlier on Monday, extending last week’s gain of around 8%, slumped on news about the first U.K. fatality from the variant and the WHO’s caution. They, however, came off their lows on long-term forecasts for oil demand from the Saudi energy minister. Oil will account for 28% of energy demand until at least 2045, down from 30% in 2020, Abdulaziz said.

Hedge funds and other money managers sold the equivalent of 19 million barrels in the six most important futures and options contracts in the week to Dec. 7, down from 131 million in the week to Nov. 30. Portfolio managers last week cut their combined position across the six contracts to just 558 million barrels (in the 40th percentile for all weeks since 2013) down from 871 million (79th percentile) on Oct. 5.

On the crude side, hedge funds’ Brent positions have been more than halved to just 154 million barrels (20th percentile) down from 333 million barrels (69th percentile) nine weeks ago.

The ratio of bullish long positions to bearish short ones in the crude benchmark has fallen to just 2.7:1 (23rd percentile), while inflation-adjusted prices are now in line with the long-term average.

At a global level, the death toll from the COVID-19 virus rose to 5.33 Million (+4,813 DoD) yesterday. The total number of active cases fell by 30,000 DoD to 22.08 million. (Click here for details).

The Omicron variant, reported in more than 60 countries, poses a “very high” global risk, with some evidence that it evades vaccine protection, according to the World Health Organization.

Asia’s naphtha crack extended gains on Monday, as hopes of steady demand over rising prices of alternative cracker feedstock liquefied petroleum gas (LPG) supported margins.

The crack rose to $159.63 a tonne from $157.38 on Friday. However, naphtha margins have dropped significantly from their November high of $173 per tonne due to lower ethylene and propylene prices amid easing tightness in the market.

With most South Korean and Japanese plants still running at full capacity, the downside to regional naphtha demand is unlikely to reduce to an extent that would significantly affect cracks, consultancy JBC Energy said in a note.

The January crack is higher at $ 4.95 /bbl.

Asia’s gasoline crack traded steadily over $12 a barrel in tandem with an increase in crude oil benchmarks over optimism that the Omicron coronavirus variant’s impact will be limited on fuel demand.

The refining profit margin settled a cent higher at $12.56 a barrel on Monday.

The January crack is higher at $12.90/ bbl.

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

Asia’s cash premiums for jet fuel dipped on Monday amid concerns that fresh travel curbs due to the Omicron coronavirus variant in some countries would slow aviation demand.

Cash differentials for jet fuel were at a premium of 32 cents per barrel to Singapore quotes, down from a 34 cent premium on Friday and its lowest since Nov. 29.

Refining margins or cracks for jet fuel, however, held largely steady at $11.72 per barrel over Dubai crude during Asian trading hours, compared with $11.73 per barrel on Friday.

The steady refining margin came despite higher crude oil prices during Asian. But prices later gave up those gains as the Omicron coronavirus variant, and doubts around the effectiveness of vaccines against it, weighed on prices.

The January crack for 500 ppm Gasoil is higher at $12.80/bbl with the 10 ppm crack at $13.80 /bbl. The regrade is at -$0.90 /bbl.

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

Cash premiums for cargoes of Asia’s 0.5% very low-sulphur fuel oil (VLSFO) slipped to a near three-week low on Monday amid absent trade activity.

Despite a persistent shortage of prompt supplies, VLSFO cash differentials have retreated from near two-year highs hit at the start of the month amid slowing year-end demand, trade sources said.

The cash premium slipped to $15.10 per tonne to Singapore quotes on Monday, down 32 cents from Friday and its lowest since Nov. 25.

The January crack for 180 cst FO is higher at  -$6.35 /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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