Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices rose over $2 a barrel on Wednesday after government data showed a larger-than-expected drawdown in U.S. crude inventories, and on expectations demand will rise as vaccination roll-outs widen.

Brent Crude futures rose $1.86, or 2.5%, to settle at $75.46 a barrel. U.S. West Texas Intermediate (WTI) crude climbed $2.15, or 3.1%, to $72.61 a barrel.

Oil prices found support from the International Energy Agency (IEA), which said on Tuesday vaccine roll-outs would power a rebound, after a three-month slide in global oil demand due to the spread of the Delta coronavirus variant and renewed pandemic restrictions.

doe data

Crude stocks were hit primarily as refining runs and exports went up even as imports declined. The extent of draw, however, seems to be overstated as per our material balance statement.


Gasoline production, inexplicably, declined even as refining runs went up. Nevertheless, the draw seems to be nearly derivable from the statement above. The difference is even greater in distillates which, as per the statement, appear to have built. Indeed, the number of crude barrels that seem to have ‘disappeared’ (if you take into account the material balance) is worrisome.

At a global level, the death toll from the COVID-19 virus rose to 4.67 Million (+10,200 DoD) yesterday. The total number of active cases fell by 10,000 DoD to 18.64 million. (Click here for details).

Asia’s naphtha crack climbed to $132.68 per tonne on Wednesday, compared with $128.78 per tonne on Tuesday.

The October crack is higher at $4.40 / bbl.

Asia’s gasoline crack rose for a fifth consecutive session on Wednesday, climbing to its strongest in nearly a month, buoyed by expectations for a gradual demand recovery as wider COVID-19 vaccinations help further ease mobility restrictions in the coming months.

Refining margins or cracks for gasoline rose to $7.79 per barrel on Wednesday, the highest since Aug. 19. The crack was at $7.63 per barrel a day earlier.

Light distillate stocks in Fujairah dropped nearly 15% to 4.9 million barrels, data released by S&P Global Platts showed yesterday. This is the lowest level since December, 2019.

The October crack is higher at $9.65 / bbl.


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

Cash differentials for gasoil with 10 ppm sulphur dipped by 5 cents to a premium of 33 cents per barrel to Singapore quotes.

Middle-distillate inventories in the Fujairah Oil Industry Zone fell 1.7% to a two-week low of 3.92 million barrels in the week ended Sept. 13, data via S&P Global Platts showed.

Asia’s cash differentials for jet fuel flipped into a narrow premium on Wednesday, supported by an uptick in buying interest for physical cargoes, while the prompt-month spread remained in a backwardated structure.

Cash differentials for jet fuel were at a premium of 6 cents per barrel to Singapore quotes on Wednesday, compared with a discount of 6 cents a barrel on Tuesday.

The Sept/Oct time spread for the aviation fuel in Singapore traded at 2 cents per barrel, while the front-month spread traded at 3 cents per barrel on Wednesday.

Refining margins or cracks for jet fuel slipped 5 cents to $6.90 per barrel over Dubai crude during Asian trade on Wednesday. The cracks, however, have gained nearly 26% in the last month, Refinitiv Eikon data showed.

The October crack for 500 ppm Gasoil is higher at $8.55 /bbl with the 10 ppm crack at $ 10.05 /bbl. The regrade is at -$ 1.30 /bbl. 

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

Asia’s front-month time spreads for both grades of high-sulphur fuel oil (HSFO) edged higher on Wednesday on signs of persistent feedstock demand from utilities as well as tightening supplies.

The front-month time spread for 180-cst HSFO and 380-cst HSFO each climbed 25 cents to $11.25 a tonne and $9.50 a tonne, respectively, Refinitiv data showed.

Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 1.25 million barrels, or about 197,000 tonnes, to 7.47 million barrels, or 1.18 million tonnes, data via S&P Global Platts showed. These levels are 40% lower than year-ago levels.

The October crack for 180 cst FO is lower at  -$2.60 /bbl with the visco spread at $2.45 /bbl.

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

No fresh trades for today. We shall consider 4Q Nap-Dubai over $ 4.00 / 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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