Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil markets dipped Wednesday as traders took stock of a modest weekly build in U.S. crude stockpiles, reported a day after the United States and several other countries announced a coordinated release of their crude reserves in a bid to cool runaway fuel prices.

Brent crude futures settled down 6 cents, or 0.07%, at $82.25 per barrel. WTI crude futures were down 11 cents, or 0.14%, at $78.39 per barrel.

Prices were also tempered by coronavirus infections that broke records in parts of Europe, prompting new curbs on movement.

The number of active U.S. oil rigs rose by six to 467 this week, the highest since April 2020, as higher crude prices have prompted some drillers to return to the wellpad.

DOE data

The DOE reported a modest build in crude stocks, albeit less than expected. The build appears to have been the effect of a 1.2 million bpd increase in net imports. The cumulative impact of all activity seems to suggest a much larger crude build as per our material balance statement below.


Product demand continues to remain strong at 9.3 mbpd for gasoline and close to 4.4 mbpd for distillates. It may be noted that both crude and gasoline stocks are at their lowest levels in the part 5 years for this time of the year.

At a global level, the death toll from the COVID-19 virus rose to 5.19 Million (+7,767 DoD) yesterday. The total number of active cases rose by 170,000 DoD to 19.67 million. (Click here for details).

Asia’s naphtha crack dropped on Wednesday as crude oil prices recouped losses after a U.S.-led coordinated release of stocks from strategic reserves eased concerns over tightness in global supply. The refining profit margin fell to $149.73 a tonne from $151.20 in the last session.

Global prices of alternative cracker feedstock liquefied petroleum gas (LPG) weakened significantly over the past week, shedding over $70 per tonne (11%) versus their early-November assessments, according to consultancy JBC Energy. “The immediate consequences of this price shock are becoming apparent in arbitrage spreads from the U.S. to Europe and Asia, which have received a considerable boost and are now trending at year-to-date highs,” the consultancy said in a note.

The December crack is higher at $ 3.15 /bbl.

The gasoline crack in the region inched higher to $7.83 a barrel from $7.75 in the previous session, after official data showed a jump of about 28% in India’s oil products imports.

The December crack is lower at $9.45/ bbl

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

Asia’s cash premiums for benchmark 10 ppm gasoil and jet fuel cargoes continued to rise on Wednesday as firming demand draws on inventories at key storage and trading hubs.

Cash differentials for gasoil with 10 ppm sulphur content  rose by 4 cents to a premium of 50 cents per barrel to Singapore quotes, a one week high.

In the paper markets, the front-month gasoil crack rose to $11.04 a barrel above Dubai crude, pulling away from a two-month low of $11 hit in the previous month, Refinitiv data in Eikon showed. 

Cash differentials for Jet improved by 11 cents to a premium of 23 cents over Singapore quotes.

The jet fuel crack similarly rebounded from Tuesday’s two-month low of $9.21 a barrel to $9.44 a barrel above Dubai crude.

Middle-distillate inventories in the Fujairah Oil Industry Zone dropped for a second week, falling 21% to a seven-week low of 2.82 million barrels in the week ended Nov. 22, data via S&P Global Platts showed. Compared to the same period last year, the Fujairah stocks were 54% lower. 

The December crack for 500 ppm Gasoil is lower at $9.85/bbl with the 10 ppm crack at $ 11.15 /bbl. The regrade is at -$ 0.15 /bbl. 

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

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) crack and time-spread jumped to near two-year highs on Wednesday amid few signs of easing supply constraints over the near term.

The front-month VLSFO time spread spiked to $16 a tonne on Wednesday, up from $11.25 in the previous session. The front-month crack rose to $14.99 a barrel above Dubai crude from Tuesday’s $13.63 a barrel, Refinitiv data in Eikon showed. Both time spread and crack values are currently at their highest since early 2020.

Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 1.72 million barrels, or about 270,000 tonnes, to 9.17 million barrels, or 1.44 million tonnes, data via S&P Global Platts showed. Compared to the same period last year, Fujairah’s fuel oil inventories were 26% higher.

The December crack for 180 cst FO is higher at  -$7.35 /bbl with the visco spread at $1.40 /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.

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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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