Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices rose modestly in a see-saw session on Tuesday, as concerns about the global consumption outlook counterbalanced the struggle by big OPEC producers to pump enough supply to meet growing demand.

Brent crude futures  settled just up 44 cents at $74.36 a barrel, after falling by almost 2% on Monday.

The October West Texas Intermediate (WTI) contract, which expired on Tuesday, rose 27 cents to settle at $70.56 a barrel, after dropping 2.3% in the previous session. The more active November contract rose 35 cents a barrel to $70.49.

Brent and the November WTI contract earlier reached session highs of $75.18 a barrel and $71.48 per barrel, respectively with both benchmarks being up by over $1 per barrel. 


The API data is definitely supportive for oil prices as both Crude and distillate inventories seem headed for 5 year lows sooner rather than later. We await official data to be released later today.

At a global level, the death toll from the COVID-19 virus rose to 4.72 Million (+8,205 DoD) yesterday. The total number of active cases fell by 60,000 DoD to 18.56 million. (Click here for details).

Asia’s naphtha crack gained for a fifth straight session on Tuesday and hit a five-week high on hopes of firm demand. The crack rose to $141.43 a tonne, the highest since mid-August, from $139.15 on Monday, while the prompt inter-month spread was unchanged at $7.25 in backwardation.

“The prevailing market strength is expected to be sustained on strong demand from the petrochemical sector, with persistently high prices of rival cracker feedstock liquefied petroleum gas (LPG) having also made switching economics unworkable,” Refinitiv Oil Research said in a report late on Monday. Naphtha supplies, on the other hand, are likely to be squeezed on limited incoming arbitrage inflows next month.

Iran said on Tuesday that talks with world powers over reviving its 2015 nuclear deal would resume in a few weeks, the official Iranian news agency IRNA reported. “Every meeting requires prior coordination and the preparation of an agenda. As previously emphasised, the Vienna talks will resume soon and over the next few weeks,” Iranian Foreign Ministry spokesman Saeed Khatibzadeh said, according to IRNA.

The October crack is higher at $4.85 / bbl.

Asia’s gasoline crack rose above the mark of $7 a barrel to $7.36 after three consecutive days of losses, as analysts forecast a decline in U.S. inventories. The crack was at $6.87 in the last session. 

The October crack is higher at $9.35 / bbl.


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

Cash differentials for gasoil with 10 ppm sulphur rose 8 cents to a premium of 45 cents per barrel to Singapore quotes, a level not seen since July last year.

Asia’s cash differentials for jet fuel flipped back to a discount of 6 cents per barrel to Singapore quotes on Tuesday, compared with a premium of 10 cents per barrel a day earlier.

Asian refining margins for jet fuel rose to their highest levels since March 2020 on Tuesday as scheduled airline capacity in some countries were increased amid easing COVID-19 travel restrictions.

Refining margins or cracks for jet fuel climbed to $7.91 per barrel over Dubai crude during Asian trading hours, from $7.74 per barrel a day earlier.

Scheduled airline seat capacity in Japan rose by about 74,500 seats or 3.6% this week, while flight capacity in South Korea and India rose 6.3% and 1.0%, respectively, according to aviation data firm OAG. However, scheduled capacity in China fell by 605,000 seats or 3.9% this week, following a rise in COVID-19 infections in the Fujian province, which in turn pushed the global seat capacity lower by 0.3% to 78.8 million seats in the week to Monday, OAG data showed.

The October crack for 500 ppm Gasoil is higher at $9.10 /bbl with the 10 ppm crack at $ 10.60 /bbl. The regrade is at -$ 1.00 /bbl. 

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

Cash premiums for cargoes of Asian fuel oil dropped on Tuesday amid absent physical trade and lower supplier offers for cargoes of the fuel.

The drop in premiums was lead by 180-cst HSFO, which fell to a two-week low of $14.58 per tonne to Singapore quotes, down from $20.40 a tonne in the previous session.

Cash premiums for 0.5% very low-sulphur fuel oil (VLSFO) also weakened, slipping to a more than one-week low of $2.71 a tonne to Singapore quotes.

In the paper market, however, the front-month 180-cst HSFO time spread edged higher to a three-week high of $14.75 a tonne, Refinitiv data showed.

The October crack for 180 cst FO is higher at  -$0.90 /bbl with the visco spread at $2.85 /bbl.

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

No trades for now. We shall hedge 1Q Nap-Dubai rates over $3.75 / 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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