Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Fear that Iran might win back its stalled nuclear deal from global powers to pave its re-entry into the export market for oil sent crude prices near six-month lows on Monday, prompting OPEC supremo Saudi Arabia to issue a thinly-veiled threat that it will slash the group’s production if the market kept tanking.

Brent settled down 24 cents, or 0.3%, at $96.48. Brent’s session low was $92.37. Brent is down more than 12% since the start of August, after a 6.5% drop in July and a slide of more than 4% in June.

WTI settled down 54 cents, or 0.6%, at $90.23 a barrel. It fell to as low as $86.30 earlier in the day. WTI is down almost 10% since the start of August, extending the back-to-back loss of more than 7% in July and June.

“The paper and physical markets [for oil] are increasingly disconnected,” Saudi Energy Minister Abdulaziz bin Salman said shortly after prices continued to drop on Monday.

The U.S. State Department, responding to the speculation, confirmed in a statement on Monday that Washington and Tehran were closing in on a deal. “A nuclear agreement is now closer than it was two weeks ago,” the department said, adding, however, that “there are still issues that need to be resolved” in getting Iran back on the path of nuclear non-proliferation and legitimizing its oil exports.

In a sign of overall concern about the Chinese economy, Beijing cut its benchmark lending rate and lowered the mortgage reference by a bigger margin to revive an economy hobbled by a property crisis and a resurgence of COVID cases.

Asia’s naphtha crack extended losses amid muted trading at the Singapore window. The crack dropped $3.12 to a discount of $34.10 a tonne on Monday. 

Naphtha margins have shed over 65% from the start of this month.

The September crack is lower at -$ 16.75 per barrel 

Asia’s gasoline crack continued to climb on Monday after crude oil benchmarks weakened, although gains were capped by fuel demand worries in China.

The crack rose to $14.52 a barrel from $13.88 a barrel in the last session. Gasoline margins posted gains of more than 30% last week amid inventory drawdowns at key trading hubs.

The September crack is higher at $14.05 per barrel.

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

Asia’s refining margins for jet fuel and gasoil with 10 ppm sulphur content rose on Monday, amid a muted trading window, as weaker oil prices weighed.

Cash differentials for 10 ppm gasoil stood at a premium of $1.09 a barrel to Singapore quotes, up from $1.03 in the previous session.

Refining margins or cracks for 10 ppm gasoil rose to $48.81 a barrel over Dubai crude in Asian trading hours, hitting their highest since mid-July, compared with $46.14 on Friday.

Cash differentials for jet rose to a premium of 11 cents a barrel to Singapore quotes, up from a premium of 9 cents in the previous session.

Refining margins for jet fuel rose to $43.11 a barrel over Dubai crude during Asian trading hours, hitting their highest since mid-July, compared with $40.63 on Friday.

The September crack for 500 ppm Gasoil is lower at $45.05 /bbl with the 10 ppm crack higher at $49.05 /bbl. The 10 ppm regrade is at -$5.75 /bbl.

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

Asia’s cash premium for 380-cst high sulphur fuel oil (HSFO) fell for a third consecutive session on Monday, cooling off after a short-lived rally to three-month highs last week. The 380-cst HSFO cash premium fell $1.33 to $6.31 per tonne over Singapore quotes on Monday, coming off from three-month highs of $16.11 seen in mid-August.

Tthe very low sulphur fuel oil (VLSFO) market remains underpinned by ample supplies into early September. The cash differential dipped 69 cents to a premium of $14.57 per tonne over Singapore quotes on Monday.

In contrast, the 380 cSt HSFO cash differential fell $4.04 per tonne to a premium of $7.64 per tonne as several competitive offers made up for the lack of any trade.

The September crack for 180 cst FO is lower at – $18.15 /bbl with the visco spread at $1.85 /bbl.

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

No fresh activity 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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