Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices steadied on Thursday after hitting a multi-week high a day earlier as the threat to U.S. Gulf crude production from Hurricane Nicholas receded.

Brent Crude ended the session up 21 cents, or 0.3%, at $75.67 a barrel. On Wednesday Brent touched $76.13, its highest since July 30.

U.S. West Texas Intermediate (WTI) ended the session unchanged at $72.61 a barrel after climbing to the highest since Aug. 2 on Wednesday.

“With prices now back around summer highs, we are seeing some profit taking kicking in, but the rally continues to look well supported,” said Craig Erlam, senior market analyst at OANDA.

At a global level, the death toll from the COVID-19 virus rose to 4.68 Million (+9,170 DoD) yesterday. The total number of active cases rose by 30,000 DoD to 18.67 million. (Click here for details).

Asia’s naphtha crack rose for a second straight session, while the prompt inter-month spread widened to $6.25 a tonne in backwardation. The refining margin climbed to $136.13 a tonne from $132.68 in the last session.

The October crack is higher at $4.60 / bbl.

Asia’s gasoline crack eased from four-week highs on Thursday to snap its five-day rally after inventories in Singapore increased. 

The crack slipped to $7.45 a barrel from $7.79 in the previous session. However, the downside remained limited as Indian gasoline sales stayed above the pre-pandemic levels at 1.02 million tonnes.

Singapore’s light distillates stocks rose by 730,000 barrels to a more than two-month high of 13.98 million barrels last week, data from Enterprise Singapore showed, indicating tepid demand.

The October crack is lower at $9.40 / bbl.


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

Cash differentials for gasoil with 10 ppm sulphur dipped 2 cents to 31 cents per barrel to Singapore quotes on muted buying interest in the physical trade window.

The Oct/Nov time spread for the benchmark gasoil grade in Singapore widened its backwardation on Thursday to trade at 43 cents per barrel.

Asian refining margins for 10 ppm gasoil rose on Thursday, surging to its strongest in nearly one-and-a-half years, lifted by steady arbitrage demand from the West amid relatively tighter supplies.

Refining margins, also known as cracks, for 10 ppm gasoil jumped to $10.10 per barrel over Dubai crude during Asian trading hours, a level not seen since March-end last year. The cracks, which have gained 7.7% in the last week, were at $9.58 per barrel on Wednesday.

Singapore’s middle distillate inventories rose 9.5% to 10.9 million barrels in the week to Sept. 15, according to Enterprise Singapore data. This week’s stocks were 28.8% lower than a year earlier.

Asia’s cash differentials for jet fuel flipped back to a discount of 6 cents per barrel to Singapore quotes on Thursday, compared with a premium of 6 cents a barrel a day earlier.

The October crack for 500 ppm Gasoil is higher at $9.00 /bbl with the 10 ppm crack at $ 10.50 /bbl. The regrade is at -$ 1.30 /bbl. 

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

Asia’s front-month high-sulphur fuel oil (HSFO) viscosity spread climbed to a near two-month high on Thursday amid tight HSFO supplies, particularly for the lower viscosity fuel due to strong demand from utilities.

The front-month viscosity spread climbed to $18.75 per tonne on Thursday, up $3 from the previous session, and its highest since Oct. 14, according to Refinitiv data in Eikon.

Onshore fuel oil stocks fell by 2.85 million barrels, or about 448,000 tonnes, to a two-week low of 21.3 million barrels, or 3.35 million tonnes, according to Enterprise Singapore data. The residual fuel stocks were on par with year-ago levels but were below the 2021 weekly average of 23.05 million barrels.

The October crack for 180 cst FO is higher at  -$1.75 /bbl with the visco spread at $2.85 /bbl.

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

We shall hedge 4Q Nap-Dubai at current rates of $ 4.45 / bbl. We shall also hedge October 180 cst – Dubai at current levels of -$1.45 / 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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