Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices soared on Monday, gaining on a pause in talks to end U.S. sanctions on Iranian crude, and as the dollar retreated from two-month highs.

Brent crude for August gained $1.39, or 1.9% to settle at $74.90 a barrel. U.S. West Texas Intermediate (WTI) crude for July gained $2.02, or 2.8%, to end at $73.66.

The WTI-Brent spread narrowed to its lowest in more than 7 months, demonstrating that US oil output is still in the COVID-19 doldrums with the market likely to remain undersupplied.

India’s May’21 crude oil imports slipped to their lowest in 3 months, falling 5.5% MoM to 17.26 MMT, as fuel demand sagged amid a second wave of the COVID-19 pandemic that crimped economic activity and mobility.

Iranian President-elect Ebrahim Raisi on Monday backed talks between Iran and six world powers to revive a 2015 nuclear deal but flatly rejected meeting the US President, even if Washington removed all sanctions.

Iran could quickly export millions of barrels of oil it is holding in storage if it reaches a deal with the US on its nuclear programme and has been moving oil into place to prepare for an eventual restart, industrial sources said.

US energy firms added 6 rigs to total 365 (+166 YoY), the highest since Apr’20, according to Baker Hughes, as growth in drilling slows despite crude prices hitting their highest since 2018.

Money managers raised their net long US crude futures and options positions by 9,494 contracts to total 433,970 in the week to 15 Jun’21, the US CFTC said on Monday.


Data not updated

At a global level, the death toll from the COVID-19 virus rose to 3.88 Million (+6,263 DoD) yesterday. The total number of active cases rose fell by around 100,000 DoD to 11.56 million. (Click here for details).

Asia’s naphtha crack edged higher on Monday, but stayed within close sight of a multi-week low touched last week, weighed down by expectations for surging near-term supplies arriving from the West.

The naphtha crack inched up to $90.88 per tonne on Monday, up from $90.07 per tonne on Friday. The crack has shed about 15% in the last two weeks.

Asia is expected to see at least a 25% jump in western naphtha supplies next month as traders have boosted U.S. shipments expecting higher demand from Asia as three new crackers in South Korea and China are starting operations in June and July.

The July crack is higher at -$0.30 / bbl

Asian gasoline crack rose by 14 cents to $5.30 per barrel on Monday, but traders remain concerned the market would likely remain under pressure in the short term as refineries returning from seasonal turnarounds would add to regional supplies.

The July crack is lower at 8.20 / bbl

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

Asian refining margins for 10 ppm gasoil dropped on Monday, as raw material crude prices firmed, but traders were hopeful that regional demand would gradually pick up pace in coming months as countries increasingly ease COVID-19 restrictions.

Cash differentials for gasoil with 10 ppm sulphur content widened their discounts to 7 cents per barrel to Singapore quotes on Monday, while the July/August time spread for the fuel traded at 2 cents per barrel.

Cash discounts for gasoil with 10 ppm sulphur content widened by 2 cents to 4 cents per barrel to Singapore quotes on Friday. 

Cash discounts for jet fuel widened by a cent to 32 cents per barrel to Singapore quotes on Friday.

Global scheduled airline capacity was up 2.2% WoW for the week started 21 Jun’21, marking a 15-month high of 72.4 million seats, however, still only recovering to 67.9% of its pre-pandemic Jan’20 levels, according to OAG.

The July crack for 500 ppm Gasoil is lower at $6.20 /bbl with the 10 ppm crack at $ 8.20 /bbl. The regrade is at -$ 0.55 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market complex was largely unchanged on Monday amid thin trade liquidity in the physical and paper markets, trade sources said.

The front-month VLSFO crack nudged 2 cents lower to $11.53 a barrel above Dubai crude, Refinitiv data in Eikon showed, as crude oil prices firmed.

The front-month VLSFO crack has been range bound over the past two weeks trading between $11 and $12 a barrel, the data showed, as supplies remained ample and demand sluggish.

The June crack for 180 cst FO is lower at  -$5.80 /bbl with the visco spread at $1.30 /bbl.

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

No fresh action 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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