Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices fell on Friday, wiping out gains from the previous session, on worries that the U.S. Federal Reserve will accelerate plans to boost interest rates to tame inflation. Oil’s overextended rally certainly needed a correction and a third weekly loss seems to point toward that.

Brent crude futures finished down 70 cents, or 1.2%, to $82.17 per barrel on the day. For the week, Brent was down 0.8%, after the back-to-back losses of 1.9% and 1.3% respectively in the previous two weeks. Brent scaled a three-year high above $86 last month .and remains up 58% for the year.

WTI crude futures settled down 80 cents, or almost 1%, at $80.79 per barrel. For the week, WTI was down 0.6%, after back-to-back losses of 2.8% and 0.2% in the previous two weeks. Still, compared to WTI’s seven-year highs above $85 in October, the deficit was just a drop in the barrel, so to speak. The U.S. crude benchmark also remains up 65% for the year.

Both benchmarks fell for a third consecutive week, hit by a strengthening dollar and speculation that President Joe Biden’s administration might release oil from the U.S. Strategic Petroleum Reserve to cool prices..

“This week has been a good reminder for oil markets that prices are not only affected by the supply-demand trajectory, but also from monetary policy forecasts and by forms of government intervention,” said Louise Dickson, senior oil markets analyst at Rystad Energy. “Higher interest rates would provide even further support to the dollar and even more downward pressure on oil prices.”.

U.S. oil rigs rose four to 454 this week, their highest since April 2020 as reported by the energy service firm Baker-Hughes in their widely followed weekly report.

At a global level, the death toll from the COVID-19 virus rose to 5.12 Million (+4,464 DoD) yesterday. The total number of active cases rose by 30,000 DoD to 19.23 million. (Click here for details).

Asia’s naphtha crack registered a weekly gain on Friday after European stocks declined, and feedstock demand remained firm.

The refining profit margin rose to $171.60 a tonne from $167.63 in the last session. Naphtha cracks have risen over 2% this month amid a tight market.

Naphtha stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area dropped to 193,000 tonnes in the week to Nov. 11 from 204,000 tonnes in the prior week.

The December crack is lower at $ 4.70 /bbl.

Asia’s gasoline crack dropped below $11 per barrel despite a 1.2% decline in ARA inventories, due to slowed supply from China.

The crack fell to $10.78 a barrel from $12.09 in the last session. Gasoline margins had nearly doubled in the last two months on the back of recovering demand with the easing of mobility-related pandemic curbs.

The December crack is lower at $10.45 / bbl

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

Cash differentials for gasoil with 10 ppm sulphur content, dropped by 13 cents to a premium of 73 cents per barrel over Singapore quotes on Friday.

Asia’s cash premiums for jet fuel inched higher on Friday, hitting their highest levels in 22 months, buoyed by active buying interests for physical cargoes amid expectations for aviation demand recovery in coming months.

Cash differentials for jet fuel rose by a cent to premium of 36 cents per barrel over Singapore quotes. This level has not been seen since January 2020.

The December crack for 500 ppm Gasoil is lower at $11.00 /bbl with the 10 ppm crack at $ 12.30 /bbl. The regrade is at -$ 0.50 /bbl. 

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

Lifted by a jump in demand for spot cargoes on Friday, the cash premium for Asia’s 0.5% very low-sulphur fuel oil (VLSFO) extended gains for a fifth straight session to climb to a near two-year high.

The VLSFO cash premium rose to $8 a tonne to Singapore quotes on Friday, its highest since February 2020 when new global rules capped the sulphur content in marine fuels at 0.5%.

Fuel oil stocks in the ARA refining and storage rose 5%, or 53,000 tonnes, to 1.07 million tonnes in the week ended Nov. 11, data from Dutch consultancy Insights Global (IG) showed. Compared with last year, however, the inventories at the ARA hub were 21% lower and were below the five-year seasonal average of 1.19 million tonnes. 

The December crack for 180 cst FO is higher at  -$8.15 /bbl with the visco spread at $1.30 /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

Leave a Comment