Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices closed out their biggest week of losses in more than nine months with another down day on Friday, as investors sold futures in anticipation of weakened fuel demand worldwide due to a surge in COVID-19 cases.

Brent Crude futures fell 8% on the week, settling down $1.27, or 1.9%, to $65.18 a barrel, its lowest since April. 

WTI futures for September settled down $1.37, or 2.2%, to $62.32 a barrel on Friday, to lose more than 9% for the week.

Futures contracts suggest that the market expects plenty of supply in coming months. The premium for the front month Brent contract over the third-month contract has nearly halved between late July and now, indicating that near-term supply will not be as tight as the market had expected.

The U.S. dollar hit a nine-month high on signs the U.S. Federal Reserve is considering reducing stimulus this year. Oil prices move inversely to the U.S. currency, making oil more expensive for foreign purchasers when the dollar rallies.

U.S. oil rigs rose eight to 405 this week, their highest since April 2020 according to the Baker Hughes Rig Count.

Money managers cut their net long U.S. crude futures and options positions by 8,634 contracts to 274,968  in the week to August 17, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. 

At a global level, the death toll from the COVID-19 virus rose to 4.44 Million (+8,264 DoD) yesterday. The total number of active cases rose by 20,000 DoD to 17.95 million. (Click here for details).

Asia’s naphtha crack eased for a seventh consecutive session on Friday, and the market flipped into contango with the prompt inter-month spread at $1 a tonne for the first time since December 2020.

The crack dipped to $107.83 a tonne from $112.33 in the previous session.

Naphtha inventories at ARA increased by 20%, due to high imports from the United States, data from Dutch consultancy Insights Global showed.

The September crack is unchanged at $3.40 / bbl.

Asia’s gasoline crack also slipped despite huge draw-down in Northwest European stocks, as new curbs in countries facing surge in COVID-19 Delta variant dented demand hopes.

Gasoline stocks in ARA fell 8% to the lowest level since October 2016 amid high transatlantic exports, data from Dutch consultancy Insights Global showed.

The crack fell to $7.41 a barrel, the lowest since June, from $8.51 in the previous session.

The September crack is lower at $8.60 / bbl.

 

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

Cash differentials for gasoil with 10 ppm sulphur content flipped to a discount of 4 cents per barrel to Singapore quotes on Friday. They were at a premium of  12 cents on the previous day.

ARA gasoil inventories rose 0.6% this week to 2.1 million tonnes.

Cash differentials for jet fuel dipped to a premium of 3 cents per barrel to Singapore quotes on Friday, while the Sept/Oct time spread traded at a contango of minus 4 cents per barrel.

Asian refining margins for jet fuel dropped on Friday, while cash premiums for the aviation fuel slipped for a third straight session as surging cases of the Delta variant in several countries force governments to extend travel curbs and border restrictions.

Refining margins for jet fuel slipped to $5.39 per barrel over Dubai crude during Asian trading hours, down 34 cents from a day earlier.

The front-month time spread for jet fuel remained in a contango structure to trade at minus 6 cents per barrel, Refinitiv data showed.

Middle-distillate inventories in the Fujairah Oil Industry Zone jumped 35.3% to 4.05 million barrels in the week ended Aug. 16, data via S&P Global Platts showed.

The September crack for 500 ppm Gasoil is lower at $6.10 /bbl with the 10 ppm crack at $ 8.10 /bbl. The regrade is at -$ 1.55 /bbl. 

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

Asia’s front-month 0.5% very low-sulphur fuel oil (VLSFO) crack against Dubai crude dipped on Friday, staying within close sight of a near three-month low touched at the beginning of the week, but trade sources said supplies were tightening gradually.

The front-month VLSFO crack was at $11.46 a barrel above Dubai crude on Friday, compared with $11.64 on Thursday, according to Refinitiv data in Eikon.

Cash differential for Asia’s 0.5% VLSFO was at a premium of $2.85 a tonne to Singapore quotes on Friday, up from $2.53 per tonne in the previous session.

Fuel oil stocks in the ARA refining and storage rose by 17,000 tonnes to 1.25 million tonnes in the week ended Aug. 19, data from Dutch consultancy Insights Global showed.

Compared with last year, the inventories at the ARA hub were 7% lower, but were above the five-year seasonal average of 1.09 million tonnes.

The September crack for 180 cst FO is higher at  -$4.10 /bbl with the visco spread at $1.45 /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.

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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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