Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices dropped around 2% on Friday, as the increase in fresh cases due to the Omicron variant assumed alarming proportions.

Brent crude futures settled down settled down $1.50, or 2%, at $73.52 a barrel, after a session high of $74.97 and bottom of $72.65. For the week, Brent was down 3.3%. The global crude benchmark gained 7.5% last week after losing 18% six weeks prior when it fell to a four-month low of $65.80 from seven-year highs of $86.70 in mid-October.

WTI crude futures dropped $1.52, or 2.1%, to settle at $70.86 a barrel, after oscillating between a session peak of $72.25 and low of $69.94. Week-to-date, WTI was down 1.1% after last week’s outsized gain of 8.2%. Prior to that, U.S. crude had been down for six weeks back-to-back, losing 20% in all and falling to as low as $62.48 from this year’s peak of $85.41.

Oil prices slumped by about 2% early on Monday as surging cases of the Omicron coronavirus variant in Europe and the United States stoked investor worries that new restrictions on businesses to combat its spread may hit fuel demand.

Brent crude futures fell $1.36, or 1.9%, to $72.16 a barrel by 0036 GMT while WTI crude futures fell $1.51, or 2.1%, to $69.35 a barrel.

Active oil rigs in the US rose by 4 in the last week to 475, the highest since April 2020, reports Baker-Hughes in its closely followed weekly report.

At a global level, the death toll from the COVID-19 virus rose to 5.37 Million (+3,655 DoD) yesterday. The total number of active cases rose by 140,000 DoD to 22.96 million. (Click here for details).

In Denmark, South Africa and Britain, the number of new Omicron cases has been doubling every two days. Danish Prime Minister Mette Frederiksen said on Friday her government would propose new restrictions.

In the United States, the rapid spread of the Omicron variant has led some companies to pause plans to get workers back into offices.

Asia’s naphtha crack climbed on Friday, posting a second consecutive weekly rise, buoyed by steady petrochemicals demand.

Asia’s naphtha crack climbed to $160.70 per tonne on Friday, up from $158.73 per tonne on Thursday. The crack has gained 2.1% last week.

ARA naphtha inventories fell 15.5% to 185,000 tonnes in the week to Dec. 16, data from Dutch consultancy Insights Global showed.

The January crack is lower at $ 4.80 /bbl.

Asia’s gasoline crack rose to $11.86 per barrel on Friday, compared with $10.18 per barrel a day earlier.

ARA gasoline inventories dropped 11.8% to 940,000 tonnes in the week to Dec. 16, data from Dutch consultancy Insights Global showed.

The January crack is higher at $12.50/ bbl.

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

Asia’s cash premiums for jet fuel rose on Friday, posting a weekly gain on a gradual uptick in aviation demand, but global airlines were keeping a close eye on the increasing Omicron coronavirus cases that may dampen further recovery.

The regional jet fuel market, however, would remain partly supported by the seasonal heating demand for kerosene during the peak winter months in Japan, market watchers said.

Cash premiums for jet fuel rose to 75 cents per barrel to Singapore quotes, the highest since May 2018. The differentials were at a 58-cent premium on Thursday, and have more than doubled this week.

Refining margins, also known as cracks, for jet fuel dipped to $11.52 per barrel over Dubai crude during Asian trading hours, 6 cents lower from a day earlier. The cracks have slipped 1.8% this week

ARA gasoil inventories dropped 10.3% to 1.7 million tonnes in the week ended Dec. 16, according to Dutch consultancy Insights Global. ARA jet fuel inventories fell 3.8% this week to 870,000 tonnes

The January crack for 500 ppm Gasoil is lower at $11.85 /bbl with the 10 ppm crack at $12.85 /bbl. The regrade is at -$0.75 /bbl.

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) front-month contract widened its backwardation on Friday amid few signs of easing near term supply shortages.

The front-month VLSFO time spread rose to $17.25 a tonne on Friday, down from $15.75 a tonne on Thursday and its widest premium since Nov. 30, Refinitiv data in Eikon showed. 

By contract, the front-month VLSFO crack slipped to to $15.28 a barrel above Dubai crude, down from the previous sessions’ near nine-month high of $15.51 a barrel, Refinitiv data showed. 

The weaker crack came despite lower crude oil prices which dipped on Friday, putting the market on track for a weekly loss, as surging cases of the Omicron coronavirus variant raised fears new curbs may hit fuel demand. O/R

Fuel oil stocks in the ARA refining and storage fell 7%, or 82,000 tonnes, to a five-week low of 1.09 million tonnes in the week ended Dec. 16, data from Dutch consultancy Insights Global (IG) showed.

Compared with last year, the inventories at the ARA hub were down 14% and below the five-year seasonal average of 1.14 million tonnes.

The January crack for 180 cst FO is lower at  -$6.00 /bbl with the visco spread at $1.25 /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.

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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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