Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude oil prices pushed higher Thursday, helped by a broader market rally which has recently outweighed concerns about the impact on energy demand from the rise in global Covid cases.

Brent Crude finished Thursday’s session up $1.56, or 2.2%, at $73.79 per barrel.

WTI crude futures settled up $1.61, or  2.3%, at $71.91 a barrel.

That said, the surge in Covid-19 cases will continue to hit sentiment in the market, particularly as the delta variant, which was first noticed in India, has now made its way to the United States. It is now the cause of more than 80% of new U.S. Covid-19 cases, according to top U.S. infectious disease expert Anthony Fauci on Tuesday.

On top of this, European Central Bank President Christine Lagarde warned earlier Thursday that the fresh wave of the pandemic could pose a risk to the Eurozone’s economic recovery. Also Bloomberg reported that China supplied oil from state-run inventories to the country’s largest refiners earlier this month in a bid to stifle the price rally.


At a global level, the death toll from the COVID-19 virus rose to 4.15 Million (+8,897 DoD) yesterday. The total number of active cases rose by 180,000 DoD to 13.51 million. (Click here for details).


Asia’s naphtha crack dipped on Wednesday but stayed within close sight of a multi-year high touched in the previous session, supported by strong petrochemicals demand, while a drop in Middle East arbitrage arrivals offset increased inflows from the West.

Asia’s naphtha crack rose to $136.28 per tonne on Thursday, compared with $130.88 a tonne on Wednesday.

rose to $136.28 per tonne on Thursday, compared with $130.88 a tonne on Wednesday. 

The August crack is higher at $3.75 / bbl

Asian refining margins for gasoline rose on Thursday, partly supported by tighter cargo supplies, but traders were concerned that demand for the transportation fuel would take a hit due to renewed COVID-19 lockdowns in several markets.

Asia’s gasoline crack  climbed to $8.47 per barrel on Thursday, up from a near three-week low of $7.70 per barrel touched in the previous session.

Singapore’s light distillate inventories dropped 15.7% to a six-week low of 12.3 million barrels in the week to July 21, according to Enterprise Singapore data. Weekly Singapore light distillate inventories have averaged 14.1 million barrels so far this year, compared with an average of 14.2 million barrels in 2020, Reuters calculations showed.

The August crack is higher at $10.60 / bbl

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

Asia’s cash differentials for 10 ppm gasoil flipped into a narrow premium on Thursday, supported by active buying interests for physical cargoes, while Singapore middle distillate inventories slipped to a six-week low.

Cash differentials for gasoil with 10 ppm sulphur content were at a premium of 2 cents per barrel on Thursday, the strongest level in more than a month. They were at a discount of 2 cents per barrel on Wednesday.

Refining margins, or cracks, for 10 ppm gasoil dropped to $8.09 per barrel over Dubai crude during Asian trading hours, down from $8.23 per barrel a day earlier.

Singapore’s middle distillate inventories dropped 1.6% to 11.3 million barrels in the week to July 21, according to Enterprise Singapore data. Weekly Singapore middle distillate inventories have averaged 13.5 million barrels this year, compared with an average of 13.9 million barrels in 2020, Reuters calculations showed. This week’s stocks were 19.9% lower than a year earlier.

Cash differentials for jet fuel were at a discount of 16 cents per barrel to Singapore quotes on Thursday, compared with a discount of 29 cents per barrel in the last trading session on Wednesday.

The August crack for 500 ppm Gasoil is unchanged at $6.45 /bbl with the 10 ppm crack at $ 8.15 /bbl. The regrade is at -$ 0.50 /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 weakened on Thursday as weekly Singapore fuel oil inventories climbed to a six-week high.

Onshore fuel oil stocks rose by 1.35 million barrels, or about 212,000 tonnes, to a six-week high of 24.43 million barrels, or 3.85 million tonnes, Enterprise Singapore data showed.

China’s exports of VLSFO rose 31% in June from a year earlier to 1.66 million tonnes, General Administration of Customs data showed on Tuesday, as attractive prices drew clients from other bunker hubs.

Fujairah Oil Industry Zone inventories for heavy distillates and residues rose by 49,000 barrels, or about 8,000 tonnes, to 11.76 million barrels, or 1.85 million tonnes, data via S&P Global Platts showed. This was 17% lower than levels of a year ago.

The August crack for 180 cst FO is lower at  -$5.50 /bbl with the visco spread at $1.65 /bbl.

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

We shall add a tranche of JapNap – Dubai for 4Q21 at current levels of $3.70 / 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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