Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude prices notched a fifth straight weekly win after a preliminary plunge that was alleviated before the close, as longs bought the dip.

Brent crude futures settled down 49 cents, or about 0.6% lower, at $87.89 per barrel. Brent remained up 2% for the week, and around 20% higher too over the past five weeks, after hitting a seven-year high of $89.48 on Thursday.

WTI crude futures settled down 41 cents, or 0.5%, at $85.14 per barrel. Earlier in Friday’s session, WTI tumbled more than $4, or 5%. On Wednesday, it hit a seven-year high of $87.91. It remains up more than 1% on the week, accumulating around 20% over the past five weeks.

The dive earlier in the day was triggered by worries about U.S. gasoline inventories piled up over the past three weeks and Wall Street’s worst weekly rout since the coronavirus pandemic. To some, it was a sign that prices closer to $90 a barrel may ultimately create more headwinds for crude, though the majority of oil longs seemed determined to push ahead with the rally.

India’s production of crude oil, which is refined to produce petrol and diesel, continued to decline in December 2021, with lower output from state-owned ONGC leading to a near 2 per cent drop, official data showed on Wednesday.

The number of active oil rigs in the US fell by 1 to 491, as per data reported by Baker-Hughes.

At a global level, the death toll from the COVID-19 virus rose to 5.61 Million (+6,380 DoD) yesterday. The total number of active cases rose by 900,000 DoD to 66.7 million. (Click here for details).

Asia’s naphtha crack rose on Friday as European inventories declined for a second straight week, and crude oil benchmarks eased on profit-booking. The refining profit margin rose to $133.93 a tonne, up $2.07 from the last session.

Naphtha stocks held at Amsterdam-Rotterdam-Antwerp (ARA) storage area dropped to 190,000 tonnes in the week to Jan. 20 from 223,000 in the prior week, data from Dutch consultancy Insights Global showed.

The February crack is higher at $1.90 per barrel. 

Asia’s gasoline crack inched higher to $10.17 per barrel from $10.03 on Thursday as ARA inventories declined slightly to 1.155 million tonnes.

The February crack is lower at 12.35/bbl.

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

Asia’s cash premiums for 10 ppm gasoil rose for a second straight day on Friday on hopes of robust demand after European stocks dropped by 8%.

Cash premiums for gasoil with 10 ppm sulphur content rose to $1.14 a barrel to Singapore quotes, compared with $1.10 in the previous session.

Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage area declined to 1.686 million tonnes in the week to Thursday, from 1.830 million tonnes the previous week, data from Dutch consultancy Insights Global showed.

The inventories were well below the five-year average for this time of year, which is about 2.475 million tonnes.

The February crack for 500 ppm Gasoil is higher at $15.25 /bbl with the 10 ppm crack at $16.25 /bbl. The regrade is at -$2.20 /bbl.

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

Despite falling crude oil prices, Asia’s 0.5% very low-sulphur fuel oil (VLSFO) front-month crack slipped to a five-session low on Friday, but was slightly higher than the previous week.

The front-month VLSFO crack fell to $17.06 a barrel above Dubai crude on Friday, down from $17.87 a barrel in the previous session, but up from $16.23 in the previous week, Refinitiv Eikon data showed. LFO05SGDUBCMc1

On Jan. 18, the VLSFO crack climbed to a near two-year high of $17.99 a barrel, Refinitiv data showed.

Refiners globally are reaping the highest profits from gasoil production in years on stronger-than-expected demand and tight supplies despite concerns about the Omicron coronavirus variant’s impact on the world economy. (Full Story)

The tight gasoil supplies have translated into short VLSFO supply as refiners maximize middle distillate production and fewer blending components make their way into the VLSFO pool.

Fuel oil stocks in the ARA refining and storage rose by 68,000 tonnes, or 7%, to a two-week high of 1.1 million tonnes in the week ended Jan. 20, data from Dutch consultancy Insights Global (IG) showed. Compared with last year, however, the inventories at the ARA hub were 20% lower and slightly below the five-year seasonal average of 1.18 million tonnes.

The February crack for 180 cst FO is lower at  -$5.40 /bbl with the visco spread at $2.20 /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.

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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