Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices, which rose strongly in the previous session and ahead of the release of U.S. inventory numbers on Wednesday, plunged anew after the UAE categorically denied any agreement being reached with Saudi Arabia, continuing their descent even after data showing an eight straight weekly draw in crude stockpiles.

Brent Crude fell $2.06, or 2.7%, to finish the session at $74.73 per barrel.

WTI crude futures settled down $2.12, or 2.8%, at $73.13 a barrel.

China’s first contraction in half-year oil consumption since 2013 also hurt sentiment. China’s emergence as a new negative force against oil makes the demand outlook for crude more questionable. It proves that Beijing isn’t just a cheerleader of commodity super cycles; it can also be a silent bear when prices aren’t going its way or hurting its economy.


At a global level, the death toll from the COVID-19 virus rose to 4.07 Million (+8,715 DoD) yesterday. The total number of active cases rose by 180,000 DoD to 12.29 million. (Click here for details).

The United States recorded the highest number of Covid cases over the weekend since May as the highly-transmissible Delta variant of the virus became more prevalent. There is fear that Covid variants could again hit all modes of travel around the world, impacting oil consumption.

Asia’s naphtha crack rebounded to $133.58 per tonne, from $133.13 per tonne in the previous session. 

The August crack is higher at $3.05 / bbl

Asia’s gasoline crack dipped to $8.31 per barrel, from $8.65 per barrel in the previous session.

The August crack is lower at $10.25 / bbl

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

Cash differentials for 10 ppm gasoil were at a discount of 12 cents per barrel on Wednesday, a cent higher than on Tuesday.

Middle-distillate inventories in the Fujairah Oil Industry Zone rose 1.9% to 3.7 million barrels in the week ended July 12, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 3.9 million barrels this year, compared with 4.2 million barrels in 2020, Reuters calculations showed.

Cash differentials for jet fuel were at a discount of 39 cents per barrel to Singapore quotes, compared with a 40-cent discount a day earlier.

The July/August time spread remained in a contango structure to trade at minus 20 cents per barrel on Wednesday, compared with 22 cents on Tuesday.

The August crack for 500 ppm Gasoil is lower at $6.25 /bbl with the 10 ppm crack at $ 8.25 /bbl. The regrade is at -$ 0.10 /bbl. 

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

The cash premium and the front-month time spread of Asia’s 0.5% very low-sulphur fuel oil (VLSFO) jumped on Wednesday, hitting multi-month highs on a tightening supply outlook.

Boosted by stronger bids and deals in the Singapore window, the VLSFO cash premium jumped to $2.17 a tonne above Singapore quotes on Wednesday, up from $1.53 a tonne in the previous session and its highest since March 4.

The front-month VLSFO time spread climbed to a near five-month high of $3.25 a tonne, up from $2.50 a tonne in the previous session, Refinitiv data in Eikon showed.

The high-sulphur fuel oil (HSFO) physical and paper markets also firmed on Wednesday, with 180-cst HSFO hitting a near four-month high of $2.64 a tonne as buying interest intensified.

Fujairah Oil Industry Zone inventories for heavy distillates and residues rose by 661,000 barrels, or about 104,000 tonnes, to 11.71 million barrels, or 1.84 million tonnes, data via S&P Global Platts showed. Compared with last year, however, Fujairah’s fuel oil inventories were 28% lower than year-ago levels.

The August crack for 180 cst FO is higher at  -$6.20 /bbl with the visco spread at $1.25 /bbl.

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

No fresh trades today. We will lay on one tranche more of Jap-Nap Dubai should the crack climb above $ 3.50 per bbl.

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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