Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices settled lower on Monday, paring steep losses on weak Chinese economic data after sources told Reuters that OPEC and its allies believe the markets do not need more oil than they plan to release in the coming months.

Brent Crude futures ettled down $1.08, or 1.5%, at $69.51 a barrel after earlier falling to $68.14. 

WTI fell by $1.15, or 1.7%, to $67.29 after reaching lows of $65.73. 

The market had dropped more than 3% earlier in the session after data showed Chinese factory output and retail sales growth slowed sharply in July, missing expectations, as flooding and fresh outbreaks of COVID-19 disrupted business activity.

Crude oil processing in China, the world’s biggest oil importer, last month also fell to its lowest level on a daily basis since May 2020 as independent refiners cut production in the face of tighter quotas, elevated inventories and falling profits.

U.S. oil output from seven major shale formations is expected to rise by about 49,000 barrels per day (bpd) in September, led by growth in the Permian, according to the Energy Information Administration’s monthly drilling productivity report on Monday.

Hedge funds and other money managers sold the equivalent of 64 million barrels in the six most important petroleum futures and options contracts in the week to Aug. 10, exchange and regulatory records showed. The ratio of long to short positions has dropped to 4.67:1 (62nd percentile) from 6.06:1 (80th percentile) over the same period. 

At a global level, the death toll from the COVID-19 virus rose to 4.38 Million (+7,627 DoD) yesterday. The total number of active cases rose by 70,000 DoD to 17.24 million. (Click here for details).

Asia’s naphtha crack extended losses, and the inter-month spread between the first fortnight of October and November narrowed for a fourth consecutive session to $3.25 per tonne, its lowest since January.

The crack dipped to $124.90 per tonne from $134.40 on Friday.

The September crack is lower at $3.75 / bbl.

Asia’s gasoline crack fell below $9 a barrel on Monday, after holding above multi-month highs for more than a week, as demand plunged from India, the world’s third-biggest oil importer. The crack eased to $8.95 per barrel, down from $9.27 in the previous session.

India’s gasoline sales by state-run retailers totalled 985,820 tonnes in the first half of August, a decline of 4.93% from the same period last month, preliminary sales data showed.

The September crack is lower at $10.00 / bbl.


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

Asian refining margins for 10 ppm gasoil dropped on Monday, hitting their lowest in more than two weeks, weighed down by lacklustre demand as major markets including Indonesia and Australia battle surging COVID-19 infections.

Despite weaker feedstock crude prices, cracks for 10 ppm gasoil fell to $7.84 per barrel over Dubai crude during Asian trading hours, the weakest since July 30. They were at $8.03 per barrel on Friday.

Cash differentials for gasoil with 10 ppm sulphur content were at a premium of 1 cent per barrel to Singapore quotes, compared with a premium of 3 cents per barrel on Friday.

Gasoil sales in India, at about 2.1 million tonnes during Aug. 1-15, were about 15.34% lower than the same period last month and about 7.9% lower than the corresponding period of 2019.

Cash differentials for jet fuel flipped to a premium of 5 cents per barrel to Singapore quotes. They were at minus 5 cents per barrel on Friday.

The September crack for 500 ppm Gasoil is higher at $6.20 /bbl with the 10 ppm crack at $ 7.70 /bbl. The regrade is at -$ 0.90 /bbl. 

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

Asia’s front-month 0.5% very low-sulphur fuel oil (VLSFO) crack against Dubai crude slipped to a near three-month low on Monday as sluggish bunkering demand and balanced supplies weighed, trade sources said.

The weaker crack also came despite tumbling crude oil prices after official data showed that refining throughput and economic activity slowed in China in an indication that COVID-19 outbreaks are crimping the world’s second-largest economy.

The front-month VLSFO crack was at $11.19 a barrel above Dubai crude on Monday, down from $11.30 on Friday and its lowest since May 31, according to Refinitiv data in Eikon.

The September crack for 180 cst FO is lower at  -$5.65 /bbl with the visco spread at $1.35 /bbl.

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

No fresh activity for 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.

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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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