Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices settled mixed on Monday as investors wondered whether crude supplies will increase and whether demand will be pressured by the recent surge in energy costs, the strong dollar and rising COVID-19 cases.

Brent crude futures settled down 12 cents, or 0.2%, at $82.05, after an intraday low at $80.67. Brent lost 4% in three previous weeks. The global benchmark scaled a three-year high above $86 last month and remains up 58% for the year.

WTI crude futures settled up 9 cents, or 0.1%, to $80.88 per barrel, after falling to as low as $78.30 earlier. Like Brent, WTI had lost 4% over the past three weeks after gaining a net 30% over the previous seven months. The U.S. crude benchmark hit seven-year highs above $85 in mid-October and remains up 64% on the year.

On Monday, U.S. stock markets tanked as well after the 10-year Treasury note, a key indicator of real interest rates, hit a three-week high of 1.62%. That suggested that the Federal Reserve may have to dump its “patient-for-now” stance over inflation and raise rates faster than its planned timeline of between July and December 2022.

Weighing on oil prices, the U.S. dollar hit a 16-month high against a basket of currencies as investors worried about the global economy.

U.S. shale production in December is expected to reach prepandemic levels of 8.68 million barrels a day, according to Rystad Energy. Meanwhile there are indications demand may be slowing due to heightened coronavirus cases and inflation.

China’s daily crude oil throughput rebounded in October from its lowest level in more than a year in the previous month, with refiners cranking up operations amid high fuel prices and robust demand. Processing volumes in October were 58.4 million tonnes, data from the National Bureau of Statistics (NBS) showed on Monday, equivalent to 13.75 million barrels per day (bpd), up from a 16-month low of 13.64 million bpd in September.

At a global level, the death toll from the COVID-19 virus rose to 5.12 Million (+5,315 DoD) yesterday. The total number of active cases rose by 1.1 Million DoD to 18.13 million. This seems to be a recalibration. (Click here for details).

Asia’s naphtha crack eased to $168.83 a tonne, from $171.60 in the previous session, amid dwindling supplies.

Total naphtha flows into Asia for November slipped to lowest since June at 6.2 million metric tonnes (mt), from October’s revised total of 6.6 million mt, assessments by Refinitiv Oil Research showed.

The December crack is higher at $ 4.80 /bbl.

Asia’s gasoline crack inched higher on Monday after five straight session of losses amid firm regional consumption and slowing supplies from India and China.

The refining profit margin rose to $11 a barrel, from $10.78 in the previous session. But the upside remained limited with the prospects of increase in supplies. Gasoline supply availability should inch up by the end of the year, while prompt import demand could ease slightly, according consultancy Energy Aspects.

The December crack is unchanged at $10.45 / bbl

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

Asia’s cash premiums for 10 ppm gasoil slipped on Monday, drifting away from multi-month highs touched last week, as some demand worries sprang back due to a resurgence in China’s COVID-19 cases.

Cash differentials for gasoil with 10 ppm sulphur content were at a premium of 69 cents per barrel to Singapore quotes, compared with 73 cents per barrel on Friday.

The premiums hit a more than 16-month high of 86 cents a barrel last Thursday, partly buoyed by recovering industrial demand and lower Chinese supplies. But a drop in China’s domestic consumption due to reimposed virus curbs would likely lead to increased exports from the country, while the regional market continues to get steady supplies from South Korean refiners, trade sources said.

Refining margins, also known as cracks, for 10 ppm gasoil slipped to $11.88 per barrel over Dubai crude during Asian trading hours, their lowest since Sept. 28. They were at $13.04 per barrel 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 fell by 7 cents to premium of 29 cents per barrel over Singapore quotes. 

The December crack for 500 ppm Gasoil is lower at $10.50 /bbl with the 10 ppm crack at $ 11.80 /bbl. The regrade is at -$ 0.50 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) crack and cash premium fell on Monday but sentiment remained bullish amid tight supplies and expectations of firming demand from north Asian utilities.

The front-month VLSFO crack fell to a 10-session low of $13.24 a barrel above Dubai crude, down from $13.52 on Friday, Refinitiv data in Eikon showed.

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  -$7.45 /bbl with the visco spread at $1.35 /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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