Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude oil prices rose slightly Thursday as positive sentiment over an infrastructure deal announced by the Biden administration helped overcome concerns about additional supply being announced at next week’s meeting of top producers.

Brent Crude finished the session at $75.56, up 37 cents, or 0.5%, after scaling $76.02 in the previous session, a peak not seen since October 2018.

WTI crude settled up 22 cents, or 0.5% at $73.30 a barrel. On Wednesday, WTI rose as high as $74.25, also a peak since October 2018.

The infrastructure deal struck by a group of bipartisan senators and President Joe Biden on Thursday includes partial funding by a proposed $6 billion sale from the US SPR, according to a document circulated by Republican lawmakers.

The Indian oil minister on Thursday again urged OPEC to phase out crude output cuts as high prices are stoking inflation. Earlier this year, India repeatedly blamed oil output cuts for driving up crude prices as its economy tries to recover from the pandemic.

Saudi Aramco’s chairman has joined the board of India’s Reliance Industries, in a move that signals the proposed sale of a stake in Reliance to Aramco, which has been stalled since first being announced in 2019, could go ahead soon.

US factory activity climbed to a record high in Jun’21, with the IHS Markit manufacturing PMI rising to 62.6, but manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices for both businesses and consumers.

At a global level, the death toll from the COVID-19 virus rose to 3.92 Million (+7,998 DoD) yesterday. The total number of active cases rose rose by around 60,000 DoD to 11.43 million. (Click here for details).

Asia’s naphtha crack rose for a second straight session on Thursday, partly buoyed by a slight drop in Western arbitrage arrivals this month ahead of an expected supply surge in July.

Asia’s naphtha crack climbed to $97.38 per tonne on Thursday, the strongest since June 14. It was at $96.63 per tonne a day earlier.

Western naphtha arrivals to Asia are set to rebound to around 2.3-2.4 million tonnes in July, which compares with a monthly average of 2.16 million tonnes year-to-date, Refinitiv Oil Research assessments showed.

The July crack is higher at $0.70 / bbl

Asia’s gasoline crack climbed to $6.28 per barrel on Thursday, 38 cents higher from Wednesday, riding on hopes for recovering demand as countries ease COVID-19 restrictions.

Singapore’s light distillate inventories fell 5.2% to a two-week low of 13.5 million barrels in the week to June 23, according to Enterprise Singapore data. Weekly Singapore light distillate inventories have averaged 14.24 million barrels this year, compared with an average of 14.25 million barrels in 2020, Reuters calculations showed.

The July crack is higher at 9.55 / bbl

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

Cash differentials for gasoil with 10 ppm sulphur content were unchanged at a discount of 6 cents per barrel to Singapore quotes on Thursday.

Singapore’s middle distillate inventories rose 1% to a five-week high of 13.1 million barrels in the week to June 23, according to Enterprise Singapore data. Weekly Singapore middle distillate inventories have averaged 13.7 million barrels this year, compared with an average of 13.9 million barrels in 2020, Reuters calculations showed. This week’s stocks were 6.1% lower than a year earlier.

Asia’s cash discounts for jet fuel widened further on Thursday, weighed down by sluggish demand and expectations for increasing supplies.

Cash discounts for jet fuel weakened for a fourth straight session to a discount of 42 cents per barrel, the widest since June 8.

Although the aviation market is getting some support from summer travel demand in western countries, the ongoing border restrictions in Asia and limited scopes for international flights globally will keep hurting jet fuel margins well into 2022, market watchers said.

The July crack for 500 ppm Gasoil is lower at $6.00 /bbl with the 10 ppm crack at $ 8.00 /bbl. The regrade is at -$ 0.40 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market edged higher on Thursday as the cash differential rose to a four-session high of minus 60 cents per tonne and the front-month time spread flipped back to a narrow premium of 25 cents per tonne.

Singapore fuel oil stocks fell by 574,000 barrels, or about 90,000 tonnes, to a four-week low of 23.4 million barrels, or 3.69 million tonnes, Enterprise Singapore data showed. Compared with the same period a year earlier, the residual fuel stocks were 12% lower but were on par with the 2021 weekly average of 23.24 million barrels. 

The June crack for 180 cst FO is lower at  -$5.90 /bbl with the visco spread at $1.30 /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.

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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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