Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices rosea further 3% on Tuesday, supported after Mexico suffered a large production outage due to a fire on an oil platform and also by full U.S. regulatory approval of vaccines for COVID-19.

Brent Crude futures settled up $2.30, or 3.4%, at $71.05 a barrel, while U.S. West Texas Intermediate (WTI) gained $1.90, or 2.9%, to settle at $67.54.

Oil is up more than 8% for the week, clawing back the 7.6% lost last week, the biggest weekly decline in more than nine months.

Investors took a more upbeat view on the continued fight against the virus after the U.S. Food and Drug Administration on Monday issued full approval for the Pfizer/BioNTech two-dose vaccine, having authorized it for emergency use last December.

Analysts said China’s apparent success in fighting the Delta variant of the coronavirus also boosted demand sentiment, with no cases of locally transmitted infections in the latest data.

On the supply side, a fire on an oil platform off Mexico took about 421,000 barrels per day offline.

Indian refiners’ crude throughput in July bounced to its highest in three months, as the easing of coronavirus restrictions boosted economic activity and fed demand for fuel.

api data

The draw reported by the API was less than expected but it had the effect of comforting investors that the demand story is sort of intact. We await official data later today.

At a global level, the death toll from the COVID-19 virus rose to 4.46 Million (+10,447 DoD) yesterday. The total number of active cases rose by 20,000 DoD to 18.05 million. (Click here for details).

Asia’s naphtha crack crack rose to $116.63 a tonne from $111.30 in the last session.

The prompt inter-month spread stabilised at $1.75 after flipping into contango on Friday.

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 lower at $3.45 / bbl.

Asia’s gasoline crack edged up on Tuesday, snapping a three-day losing streak, after analysts estimated a decline in U.S. inventories.

The crack was at $7.50 a barrel, the lowest since early July, up from $7.30 in the previous session.

The September crack is lower at $9.60 / bbl.


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

Cash differentials for gasoil with 10 ppm sulphur content slipped to a premium of 5 cents per barrel to Singapore quotes on Friday. They were at a premium of 8 cents on the previous day.

Cash differentials for jet fuel dipped by a couple of cents to a premium of 4 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 jet fuel refining profits dropped on Tuesday, slumping to their lowest level in nearly five months, as a majority of international flights continued to stay grounded with several countries in the region battling a persistent rise in Delta variant cases.

Refining margins for jet fuel plunged to $3.41 per barrel over Dubai crude during Asian trading hours, their weakest since April 1. They were at $5.75 per barrel a day earlier, Refinitiv data showed.

Global airlines have removed 4.8 million seats from the August schedule this week, taking this month’s capacity behind July by 10 million seats, according to aviation data firm OAG. “This week another 15 million seats have been taken out for the rest of 2021, with the majority being removed from September, which is 8.5 million seats lower this week than last week, at 363 million seats,” OAG said in a statement.

The September crack for 500 ppm Gasoil is higher at $7.10 /bbl with the 10 ppm crack at $ 8.60 /bbl. The regrade is at -$ 0.85 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) and 380-cst high-sulphur fuel oil (HSFO) markets extended gains on Tuesday, fuelled by concerns of tightening supplies and firm utilities demand, trade sources said.

VLSFO cash premiums for cargoes of the fuel climbed to a near seven-month high of $4.14 a tonne to Singapore quotes, while cash differentials for 380-cst HSFO cargoes climbed to $10.17 a tonne, their highest since January 2020.

180-cst HSFO cash premiums also hit a 10-month high of $7.42 a tonne to Singapore quotes. Similarly, the front-month VLSFO crack climbed to a near two-week high of $11.95 a barrel above Dubai crude at the end of Asian trading hours, Refinitiv data showed.

The September crack for 180 cst FO is higher at  -$3.45 /bbl with the visco spread at $1.80 /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.

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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