Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude prices resumed their upward climb as the IEA reported a return of demand to higher than pre covid levels.

Brent crude settled up 82 cents to $84 a barrel, a 1% gain, and its highest settle since October 2018.

WTI crude settled settled up 87 cents, or 1.1%, at $81.31 per barrel. WTI hit seven year-highs above $82 on Monday and has gained 68% this year from a combination of output cuts by the OPEC+ group.

In its monthly report, the IEA increased its global oil demand growth forecast in 2022 by 210,000 bpd, and now expects total oil demand in 2022 to reach 99.6 million bpd, slightly above pre-pandemic levels.

DOE data

The DOE corroborated the crude stocks build reported by API, the product draws were much smaller. Furthermore the build does not seem to be supported by our material balance statement. Having said that, this is the season for stocks to build.

The product stats from the material balance are reasonably close to the reported figures. Gasoline and Distillate demand both declined quite significantly.

At a global level, the death toll from the COVID-19 virus rose to 4.90 Million (+7,459 DoD) yesterday. The total number of active cases rose by 140,000 DoD to 17.80 million. (Click here for details).

Asia’s naphtha crack surged to over seven-year high on Thursday, on hopes of firm demand from petrochemical units, while the prompt inter-month spread widened in backwardation to $6 a tonne.

The refining profit margin climbed to $152.20 per tonne, the highest since July 2014, from $146.43 in the last session.

Propane-driven tightness in the petrochemical feedstock market offered support for Atlantic Basin pricing, and led Singapore cracks higher month-on-month, a report issued by the IEA said, adding that naphtha demand is estimated 400 kbpd higher than pre-COVID-19 levels this year.

On the supply side, Middle East naphtha exports declined by 154,000 metric tonnes (MT) in the week to Oct 10, according to data from Refinitiv.

The November crack is higher at $4.65 / bbl.

Asia’s gasoline crack climbed to over four-year high as inventories in Singapore shrank, and lower exports from India and China kept supply tight.

The crack rose to $12.56 a barrel, the strongest since September 2017, from $11.04 in the previous session.

Singapore’s stocks of light distillates declined by 82,000 barrels to a near one-year low of 11.548 million barrel in the week to Oct. 13, data from Enterprise Singapore showed.

The November crack is higher at $12.30 / bbl.


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

Asia’s cash differentials for 10 ppm gasoil were unchanged at a premium of 43 cents per barrel to Singapore quotes on Monday.

Asian refining margins for 10-ppm gasoil rose for a fourth consecutive session on Thursday, edging closer to a near two-year high in the previous week despite rising crude oil prices.

Refining margins for 10-ppm gasoil climbed to $15.27 per barrel over Dubai crude during Asian trading hours, up from $14.57 per barrel in the previous session, Refinitiv data in Eikon showed.

Middle-distillate inventories in the Fujairah Oil Industry Zone plummeted 33% to a more than one-year low of 2.59 million barrels in the week ended Oct. 11, data via S&P Global Platts showed. The Fujairah inventories were last lower in April 2020.

Singapore’s middle distillate inventories slipped 0.4% to a five-week low of 10.34 million barrels in the week to Oct. 13, according to Enterprise Singapore data. This week’s stocks were 32% lower than a year earlier.

Jet cash differentials fell by 5 cents to a premium of 1 cent per barrel premium.

The front-month jet crack rose to $13.02 a barrel, up from $12.47 on Wednesday, Refinitiv Eikon data showed.

The November crack for 500 ppm Gasoil is higher at $13.65 /bbl with the 10 ppm crack at $ 15.65 /bbl. The regrade is at -$ 0.25 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) crack extended its gains on Thursday, jumping to a more than seven-month high even as crude oil prices firmed.

The front-month VLSFO crack jumped to $13.98 a barrel above Dubai crude, up from $13.17 a barrel on Wednesday and its highest since March 5, Refinitiv Eikon data showed.

Singapore Fuel Oil stocks rose by 766,000 barrels, or about 121,000 tonnes, to 21.55 million barrels, or 3.39 million tonnes, Enterprise Singapore data showed. .

The November crack for 180 cst FO is lower at  -$2.80 /bbl with the visco spread at $1.40 /bbl.

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

No fresh trades for today. The 1Q22 Nap-Dub crack is showing a value of $4.00 / barrel today. We shall wait for a day and see if these levels persist on Monday before hedging. 

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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