Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices rose for both Friday and the week, but gains were capped by the ability of bears in the market to offset some of the optimism brought by the bulls, despite fuel at U.S. pumps itself hitting record highs.

Brent crude futures settled at $110.78 per barrel, up 79 cents, or 0.8%.

WTI crude futures settled just a penny higher at $110.29 a barrel, after rising just over $1.60, or 1.5%, at one point.

After contracting 3.5% in 2020 from disruptions forced by the coronavirus pandemic, the U.S. economy expanded by 5.7% in  2021, growing at its fastest pace since 1982. But since this year began, U.S. growth has been on a weaker trajectory, coming in at a negative 1.4% in the first quarter as the Russia-Ukraine crisis led to runaway inflation in food and energy prices

Inflation has grown just as fast as the economy, or maybe quicker, with some price gauges showing growth of as much as 8.5% on the year. The Fed, or Federal Reserve, has said it will raise interest rates non-stop and even slow the U.S. economy if necessary to bring inflation down from 40-year highs

India announced a series of changes to the tax structure levied on crucial commodities in a bid to insulate consumers from rising prices amid high inflation. Finance Minister Nirmala Sitharaman announced a cut in excise duty on petrol by 8 rupees ($0.1028) per litre, and 6 rupees per litre on diesel. The new tax regime on petrol and diesel could result in a loss of about 1 trillion Indian rupees to the government in annual revenue due to the lower collection, she said in a series of tweets.

At a global level, the death toll from the COVID-19 virus rose to 6.30 Million (+1,005 DoD) yesterday. The total number of active cases fell by 230,000 DoD to 23.47 million. (Click here for details).

Asia’s naphtha crack weakened to the lowest level since December 2020 on Monday after tight supplies in gasoline markets eroded hopes of blendstock demand amid poor downstream margins, market watchers said.

The crack plunged to $55.13 a tonne, down from $66.28 in the last session, and the inter-month spread between first-July and first-half August narrowed in backwardation to zero.

The June crack is lower at -$ 8.15 per barrel 

Asia’s gasoline crack retreated from record levels on Friday, plunging overnight from $ 37.27 to $28.85 a barrel on Monday. 

South Korea’s S-Oil Corp said it has resumed production at its No.2 residue fluidized catalytic cracking (RFCC) unit after a blast at its Onsan refinery that killed one person last week. 

The June crack is lower at $26.35 per barrel.

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

Asia’s cash premiums for 10 ppm gasoil slipped on Monday, hurt by weaker buying interests for physical cargoes, while the front-month spread for the industrial fuel grade narrowed its backwardated structure. 

Cash differentials for gasoil with 10 ppm sulphur content, which have plunged 42% so far this month, were at a premium of $4.40 a barrel to Singapore quotes on Monday. They were at a premium of $4.75 per barrel on Friday.

Refining profit margins for 10 ppm gasoil slipped to $34.26 a barrel over Dubai crude during Asian trading hours, down from $34.94 a barrel at the end of last week.

The June/July time spread for the benchmark gasoil grade in Singapore traded at $4.40 per barrel on Monday, compared with $4.80 a barrel on Friday.

The June crack for 500 ppm Gasoil is higher at $33.55 /bbl with the 10 ppm crack at $34.55 /bbl. The regrade is at -$6.40 /bbl.

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

Asia’s cash premiums for 0.5% very low-sulphur fuel oil (VLSFO) hit record highs on Friday amid persisting supply tightness from the West.

The cash premiums for Asia’s 0.5% VLSFO were at $42.72 a tonne to Singapore quotes, the highest on record, according to Reuters data which goes back to late 2019.

High-sulphur fuel oil cash differentials rebounded slightly on Friday after hitting two-month lows the day before. Cash premiums for 380-cst HSFO rose to $4.88 per tonne to Singapore quotes, compared with $4.49 per tonne a day earlier.

Meanwhile, cash differentials for 180-cst HSFO were at a discount of $1.79 per tonne to Singapore quotes on Friday, compared with a discount of $2.91 a tonne on Thursday.

Fuel oil stocks in the ARA refining and storage dipped 13,000 tonnes, or 1%, to 1.02 million tonnes in the week ended May. 19, data from Dutch consultancy Insights Global showed.

The June crack for 180 cst FO is lower at – $3.95 /bbl with the visco spread at $5.05 /bbl.

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

No fresh trades 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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