Oil prices continued their weaker start to the week Tuesday, on signs further trouble is brewing on the demand side in Asia as the Delta variant continues to run rampant and threaten travel.
Brent Crude future slipped 48 cents to settle at $69.03 a barrel.
WTI fell fell 70 cents to settle at $66.59 a barrel.
China, the world’s largest energy consumer, reported that daily crude processing in July fell to its lowest level in 14 months, exacerbating investor concerns that demand is on the backfoot and will be dealt a further blow by travel restrictions brought on by rising Covid-19 cases.
On the one hand, it is feared that processing could fall even further in August because of the Delta variant. On the other, the demand hit is believed to be transient.
India, the world’s third-biggest crude importer, also started sales of oil to state-run refiners from its Strategic Petroleum Reserve (SPR), putting in practice a new policy to commercialize federal storage by leasing out space.
api data
The API reported small draws in crude and gasoline which don’t appear to have caused much of excitement this morning. We shall await official data tomorrow.
At a global level, the death toll from the COVID-19 virus rose to 4.39 Million (+9,935 DoD) yesterday. The total number of active cases rose by 80,000 DoD to 17.32 million. (Click here for details).
Asia’s naphtha crack eased on Tuesday, and the inter-month spread between first-half October and November narrowed in backwardation to its lowest since December 2020.
The crack was at $120.55 per tonne, down from 124.90 a tonne in the last session, while the inter-month spread slimmed to $3 per tonne.
Market participants said that increasing U.S. light naphtha arbitrage, and declining ethylene prices may have pressured Asian cracks.
The September crack is lower at $3.40 / bbl.
Asia’s gasoline crack softened for a second consecutive day to $8.29 a barrel from $8.95 on Monday, as weak demand in the region weighed on margins.
Denting consumption outlook further, Japan was set to extend its state of emergency in Tokyo and other regions to Sept. 12 and widen coronavirus curbs to seven more prefectures.
The September crack is lower at $9.35 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for gasoil with 10 ppm sulphur content were at a premium of 7 cents per barrel to Singapore quotes on Tuesday, 6 cents higher than the previous day.
Cash differentials for jet fuel improved to a premium of 10 cents per barrel to Singapore quotes on Tuesday. They were at minus 5 cents per barrel on Monday.
Asian jet fuel refining margins dropped for a fourth consecutive session on Tuesday to their weakest level in more than 1-1/2 months, as airlines across the globe reduced capacity for the remainder of the year.
Refining margins, also known as cracks, for jet fuel slid to $5.36 per barrel over Dubai crude during Asian trade, their lowest since June 30. They were at $5.39 per barrel a day earlier.
Scheduled seat capacity for global airlines in August is now expected to be 1.7% lower compared with July, while capacity for the rest of the year has been reduced for every month through December, according to aviation data firm OAG.
The September crack for 500 ppm Gasoil is higher at $6.25 /bbl with the 10 ppm crack at $ 7.75 /bbl. The regrade is at -$ 0.95 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Weaker crude oil prices on Tuesday helped lift Asia’s front-month 0.5% very low-sulphur fuel oil (VLSFO) crack away from a three-month low.
The front-month VLSFO crack was at $11.30 a barrel above Dubai crude on Tuesday, down from $11.19 in the previous session, according to Refinitiv data in Eikon.
The VLSFO cash premium also edged up to a two week high of $1.32 a tonne to Singapore quotes despite absent deals in the Singapore window.
The September crack for 180 cst FO is higher at -$5.35 /bbl with the visco spread at $1.40 /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.
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.