Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

For a second day in a row, crude prices drifted almost aimlessly before settling a little lower for New York-traded West Texas Intermediate and slightly higher for the London-based Brent.

Brent crude futures were at $111.16 a barrel by 3:00 PM ET (19:00 GMT), up 38 cents, or 0.3% on the day. In the previous session, it rose 87 cents, or 0.8%.

WTI crude futures settled down 52 cents, or 0.5%, at $109.77 a barrel, after rising just a penny in the previous session.

Tuesday’s mixed close in crude came after the U.S. Energy Secretary Jennifer Granholm confirmed that an embargo on oil shipments out of the United States was something the Biden administration hasn’t ruled out in order to ease the record highs in fuel prices. “I can confirm the president is not taking any tools off the table,” Granholm said.

A steady stream of weak U.S. economic data — and a Wall Street on the cusp of bear market territory — have weighed on oil in recent days.

Monthly sales of newly-built homes in the United States fell to a two-year low in April, according to data from the Commerce Department on Tuesday that reinforced the notion of a housing market slowing from surging interest and mortgage rates.

Some 62 million barrels of Russia’s flagship Urals crude oil, a record amount, are sitting in vessels at sea, data from energy analytics firm Vortexa showed, as traders struggled to find buyers for the crude.

The volume of Urals crude oil on the water is triple the pre-war average, Vortexa said, even as Russian seaborne oil exports fell to 6.7 million barrels per day (bpd) so far in May, down about 15% from the 7.9 bpd in February.

The number of Urals cargoes at sea with no set destination is 15% of the total, also a new high, Seigle added. Some of the oil could be in transit to undisclosed buyers, while others could be unsold cargoes.

api data

The API data is decidedly bullish, notwithstanding the small build reported in crude stocks. The gasoline draw, just ahead of the driving season, is extremely supportive for prices.  We shall await the official data today. 

At a global level, the death toll from the COVID-19 virus rose to 6.30 Million (+1,629 DoD) yesterday. The total number of active cases fell by 130,000 DoD to 23.33 million. (Click here for details).

Asia’s naphtha crack extended losses on Tuesday to hit May 2020 lows, as supplies from top exporter Middle East jumped amid dwindling demand from petrochemicals units.

The refining profit margin for naphtha dropped to $39.30 a tonne, down $15.82 from Monday. It was also weighed down by higher demand for the cheaper rival feedstock, liquefied petroleum gas (LPG).

Total naphtha flows into Asia for May were notionally assessed at 5.7-5.8 million mt, up from April’s total of 5.2 million mt.

The June crack is lower at -$ 10.15 per barrel 

Asia’s gasoline crack continued to slump amidst weakness. The crack dropped by $4.11 / bbl to $24.74 / bbl. 

The June crack is higher at $27.00 per barrel.

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

Asian jet fuel refining margins climbed on Tuesday, partly supported by a gradual recovery in international airline capacity, but demand weakness in China’s key domestic aviation market is expected to cap gains in the near term.

Refining margins, also known as cracks, for jet fuel rose to $28.56 per barrel over Dubai crude during Asian trading hours, up from $27.71 per barrel a day earlier.

Cash premiums for jet fuel rose to $3.35 a barrel to Singapore quotes, compared with $2.28 per barrel a day earlier.

Global international airline capacity rose 3.3%, or over 1 million seats, to 32.6 million seats in the week to Monday, still 30% lower compared with the corresponding week in pre-pandemic 2019, according to aviation data firm OAG.

The front-month time spread for the aviation fuel in Singapore, which have remained in backwardation since late-November, traded at $2.95 a barrel on Tuesday, as against $2.25 per barrel on Monday.

“North East Asia saw domestic capacity fall by 2.8 million seats this week, or 18.5%, a large enough movement to make a significant effect on global trends… Elsewhere, most regions continue to grow,” OAG said in a statement. 

The June crack for 500 ppm Gasoil is higher at $35.30 /bbl with the 10 ppm crack at $36.30 /bbl. The regrade is at -$6.10 /bbl.

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

Asia’s fuel oil cash differentials retreated on Tuesday, as prospects of more incoming supply replenishment capped further gains from previous sessions.

Cash differentials for 380-cst HSFO fell to a premium of $5.16 per tonne to Singapore quotes on Tuesday, versus $5.30 per tonne on Monday.

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market also eased slightly on Tuesday after hitting a fresh record high on Monday. The cash premiums for Asia’s 0.5% VLSFO were at $42.78 a tonne to Singapore quotes on Tuesday, versus $43.66 a tonne on Monday.

Backwardation in the VLSFO front-month time spread also softened at $37.50 per tonne on Tuesday, after widening to two-month highs of $38.50/mt at the Asia 4:30pm (Singapore time) close on Monday.

Total fuel oil flows into East Asia are pegged higher on-month in May between 5.5 to 6.0 million mt, according to trade flow assessments by Refinitiv Oil Research as of Tuesday.

The June crack for 180 cst FO is lower at – $4.00 /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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