Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

On Monday, oil prices followed their worst week in months with their worst day in months after the OPEC meeting on Sunday. Yesterday, oil prices rose about 1% on Tuesday as bulls tried to find their footing after the epic losses of the previous session.

Brent Crude settled at $69.35 per barrel. On Monday, Brent had lost $4.97 or 6.8%.

WTI crude futures settled up 85 cents, or 1.3%, at $67.20 per barrel for the new most-actively traded month of September. August WTI, which had been the market’s gauge until Monday, lost $5.39 or 7.5% in the previous session for the largest one-day decline since April 2020. August WTI expired as a contract on Tuesday after settling up $1, or 1.5%, at $67.42 per barrel.

Monday’s dump in oil was exacerbated by a plunge in global stocks and other risk assets, including cryptocurrencies.

Tuesday’s market performance suggested that some of the worries over growth had abated, and that OPEC+ might not be in such a tenuous position to manage additional supplies in a fairly well-balanced market, said analysts.

Hedge funds and other money managers purchased the equivalent of 24 million barrels in the six most important petroleum futures and options contracts in the week to July 13. “But most of the buying consisted of repurchases of previous short sales (+15 million barrels) rather than the initiation of new long positions (+8 million), implying it was motivated by profit-taking after prices fell” Kemp adds.

api data

While the build in crude stocks was contrary to market expectations, so was the contraction in distillate stocks. We will await official data tomorrow.

 

Data as of July 19

At a global level, the death toll from the COVID-19 virus rose to 4.13 Million (+6,878 DoD) yesterday. The total number of active cases rose by 90,000 DoD to 13.03 million. (Click here for details).

Cases involving the Delta variant continue to increase and cloud the fuel demand outlook as some countries, including Australia and South Korea, reintroduced restrictive measures to curb their latest outbreaks. The U.K. on Saturday reported the highest number of daily Covid-19 cases since Jan 2021 ahead of England’s lifting of most restrictive measures on Monday.

 

Asia’s naphtha crack climbed to $137.73 per tonne on Monday, the strongest level so far this year. The crack was at $134.33 per tonne on Friday. 

The August crack is higher at $3.70 / bbl

Asia’s gasoline crack dipped on Monday, plunging to its lowest level in over two weeks, weighed down by concerns over short-term demand as several countries have reimposed COVID-19 restrictions to battle a resurgence in cases.

Asia’s gasoline crack fell to $8.08 per barrel on Monday, the weakest since July 2. The crack was at $8.71 per barrel on Friday.

China’s gasoline exports in June were 1.45 million tonnes, down from 1.55 million tonnes in May, but up 91% from June 2020, data from the General Administration of Customs showed on Sunday. Gasoline exports from India this month are expected to stay at below-average levels with volumes projected lower than 1 million tonnes for the first time in three months.

Indian state fuel retailers’ gasoline sales have exceeded pre-pandemic levels in the first fortnight of July, growing about 3.44% over the corresponding 2019 period, industry data showed on Friday.

The August crack is lower at $9.65 / bbl

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

Cash differentials for 10 ppm gasoil were unchanged at a discount of 5 cents per barrel on Friday.

Chinese refineries processed at record rates in June as plants returned from maintenance and due to the start-up of a new crude unit at private mega refiner Zhejiang Petrochemical Corp in April.

Diesel shipments from China reached 2.36 million tonnes in June, versus 1.68 million tonnes in May and 1.04 million tonnes in June 2020, data from the General Administration of Customs showed on Sunday. Jet kerosene exports also increased in June to 910,000 tonnes, the highest since April 2020 and compared with 770,000 tonnes a year earlier.

Cash differentials for jet fuel dropped by a cent to a discount of 41 cents per barrel to Singapore quotes, while the front-month time spread traded at minus 22 cents per barrel on Monday.

The August crack for 500 ppm Gasoil is higher at $6.35 /bbl with the 10 ppm crack at $ 8.35 /bbl. The regrade is at -$ 0.30 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash premiums and front-month time-spreads slipped on Monday, retreating from recent highs as traders took stock of market fundamentals.

The VLSFO cash premiums slipped to a one-week low of $1.39 a tonne to Singapore quotes, down from a near four-month high of $2.17 a tonne on Wednesday.

The front-month time-spread slipped to $2.75 a tonne on Monday, down from a near four-month high of $3.25 a tonne recorded in the previous week, Refinitiv data in Eikon showed.

The August crack for 180 cst FO is higher at  -$4.60 /bbl with the visco spread at $1.65 /bbl.

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

No action 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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