Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil’s three-day rally snapped on Thursday after U.S. crude prices neared the key $70-per-barrel resistance while Covid hospitalizations in the country approached the year’s highs.

Brent Crude futures settled down $1.18, or 1.6%, at $71.07 a barrel. U.S. West Texas Intermediate oil settled down 94 cents, or 1.4% at 67.42 a barrel.

The dollar’s rally ahead of the Fed’s Jackson Hole event also caused some unwinding of the long money in oil, said market watchers.

Mexico has begun restoring output after a fire on an offshore platform on Sunday knocked out more than 400,000 barrels per day (bpd) of production. By Tuesday, state oil firm Petroleos Mexicanos (Pemex) had recovered 71,000 bpd of production and expected to add an additional 110,000 bpd this week.

Royal Dutch Shell, Chevron Corp and others began evacuating nonessential personnel from offshore U.S. Gulf of Mexico platforms on Thursday, ahead of a storm expected to enter the Gulf this weekend.

At a global level, the death toll from the COVID-19 virus rose to 4.49 Million (+10,8 DoD) yesterday. The total number of active cases rose by 130,000 DoD to 18.33 million. (Click here for details).

Coronavirus daily infections hit a record high in Australia and South Korea, while Japan suspended the use of 1.63 million doses of Moderna Inc’s COVID-19 vaccine, more than a week after the domestic distributor received reports of contaminants in some vials.

Asia naphtha crack rose on Thursday, while the prompt inter-month spread stabilised at $1.50 a tonne in contango after BP purchased two cargoes of first-half November loading naphtha.

The crack was at $119.18 per tonne, up from $115.53 in the last session.

“August overall exports are currently at 3.35 million barrels per day, up by 7% from July levels. This boost in naphtha volumes is mainly supported by a firm demand in the petrochemical industry, apart from residential demand and some gasoline blending,” Vortexa said in a report.

The September crack is lower at $3.80 / bbl.

Asia’s gasoline crack eased on Thursday despite a decline in Singapore and U.S. inventories, as concerns over surging COVID-19 cases dented demand outlook.

The crack fell to $7.43 a barrel from $7.75 in the previous session.

Singapore light distillates stocks declined by 163,000 barrels to a two-week low of 13.231 million barrels in the week to Aug. 25, data from Enterprise Singapore showed.

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 rose to a premium of 7 cents per barrel to Singapore quotes on Thursday. They were at a premium of 3 cents on the previous day.

Asian refining margins for 10 ppm gasoil inched lower on Thursday, despite weaker feedstock crude prices, as lingering COVID-19 concerns continued to weigh on market sentiments.

Refining margins for 10 ppm gasoil dipped by a cent to $8.62 per barrel over Dubai crude during Asian trade even as crude oil prices fell for the first session this week, cutting short a three-day rally.

Arbitrage demand from the West, however, is supporting the Asian market to an extent, according to trade sources. The gasoil EFS traded around minus $30 a tonne on Thursday, a level at which the arbitrage is usually profitable. This reduces volumes coming in to Singapore.

Singapore’s middle distillate inventories rose 2.1% to a two-week high of 10.9 million barrels in the week to Aug. 25, according to Enterprise Singapore data. Weekly Singapore middle distillate inventories have averaged 13.1 million barrels this year, compared with an average of 13.9 million barrels in 2020, Reuters calculations showed. This week’s stocks were 24.3% lower than a year earlier.

Cash differentials for jet fuel, which were at a discount of 2 cents per barrel to Singapore quotes on Wednsesday, flipped back into a premium of 7 cents per barrel yesterday.

The September crack for 500 ppm Gasoil is unchanged at $7.35 /bbl with the 10 ppm crack at $ 8.85 /bbl. The regrade is at -$ 0.85 /bbl. 

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

Asia’s fuel oil market firmed on Thursday as concerns over shrinking supplies were supported by data showing fuel oil inventories in key storages fell to multi-month lows.

180-cst high-sulphur fuel oil (HSFO) cash premiums rose to a near two-year high of $9.98 a tonne to Singapore quotes, while 380-cst HSFO cargo premiums held near a 1-1/2 year high hit on Tuesday at $10.11 a tonne.

The front-month 180-cst HSFO crack discount narrowed to $3.07 a tonne below Dubai crude, Refinitiv data in Eikon showed.

The HSFO crack discount was at its narrowest in four months at minus $2.93 a barrel on Tuesday.

Onshore fuel oil stocks fell by 889,000 barrels, or about 140,000 tonnes, to 21.18 million barrels, or 3.34 million tonnes, their lowest since the week to Feb. 24, Enterprise Singapore data showed. Compared with a year earlier, residual fuel stocks were 8% lower and below the 2021 weekly average of 23.13 million barrels.

The September crack for 180 cst FO is higher at  -$2.55 /bbl with the visco spread at $1.75 /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.

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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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