Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude oil prices were mixed on Monday as demand recovery battled Covid resurgence.

Brent Crude futures rose 40 cents, or 0.5%, to settle at $74.50 per barrel. WTI crude futures fell 16 cents, or 0.2% to settle at $71.91 per barrel.

Benchmark prices rose even after the United States issued travel warnings to Spain and Portugal due to rising COVID-19 cases and a White House official told Reuters that wider travel curbs will not be lifted due to the highly infectious Delta variant and rising domestic infections.

Analysts tracking mobility data remain confident about fuel demand, counting on vaccinations to guard against strict new lockdowns.

Beijing’s crackdown on the misuse of import quotas combined with the impact of high crude prices could see China’s growth in oil imports sink to the lowest in two decades in 2021, despite an expected rise in refining rates in the second half.

Hedge funds and other money managers sold the equivalent of 172 million barrels in the six most important futures and options contracts in the week to July 20, the fastest rate since July 2018. The sales volume was the sixth highest out of more than 430 weeks since early 2013, according to records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission.

As a result, the combined position across all six contracts fell to just 729 million barrels (in the 67th percentile for all weeks since 2013) while the ratio of long to short positions dropped to 4.50:1 (61st percentile).


Data as of 25 July

At a global level, the death toll from the COVID-19 virus rose to 4.17 Million (+6,990 DoD) yesterday. The total number of active cases rose by 70,000 DoD to 13.95 million. (Click here for details).

Thailand reported a record number of coronavirus cases on Monday, while Malaysia has notched up more than 1 million infections, as the virulent Delta variant carves a deadly path through Southeast Asia – now a global epicentre for the virus.

In one encouraging sign, Britain reported its lowest daily total of new COVID-19 cases since July 4 on Monday, suggesting the recent surge in infections has passed its peak.


Asia’s naphtha crack slipped to $138.05 per tonne on Monday, dipping from a more than five-year high of $138.53 a tonne touched on Friday.

“Demand for naphtha into petchems in Asia will remain supported through the end of 2021,” said April Tan, associate director of oil markets and downstream at IHS Markit.

The August crack is higher at $3.70 / bbl

Asia’s gasoline crack  rose to $8.94 per barrel on Monday, compared with $8.77 per barrel on Friday.

Key gasoline importer Indonesia’s inflows of the transportation fuel are expected to drop for a third consecutive month in July, with volumes around 500,000-550,000 tonnes so far, Refinitiv Oil Research assessments showed. The country’s gasoline imports are expected to decline even further in August, according to the Refinitiv assessments.

The August crack is higher at $10.90 / bbl

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

Cash differentials for gasoil with 10 ppm sulphur content were at a premium of 4 cents per barrel on Monday, while the front-month time spread for the fuel grade stayed in a backwardated structure to trade at 12 cents per barrel.

Asian refining margins for 10 ppm gasoil dropped on Monday, plunging to their weakest level in more than three weeks, as ongoing lockdowns in the region continue to weigh on industrial and transportation demand.

The 10 ppm gasoil crack fell to $8 per barrel over Dubai crude during Asian trading hours, the lowest since June 30. It was at $8.12 per barrel on Friday.

Cash differentials for jet fuel were three cents lower at a discount of 8 cents per barrel to Singapore quotes on Monday. 

The August crack for 500 ppm Gasoil is higher at $6.70 /bbl with the 10 ppm crack at $ 8.10 /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) front-month time spread and crack slipped on Monday despite a tight near-term supply outlook.

The front-month VLSFO time spread slipped to a three-week low of $2 a tonne while the front month crack was down to a near four-week low of $11.64 a barrel above Dubai crude, Refinitiv data in Eikon showed.

Fuel oil stocks in ARA fell by 182,000 tonnes to 1.03 million tonnes in the week ended July 22, data from Dutch consultancy Insights Global showed. Compared with last year, the inventories at the ARA hub were 21% lower and below the five-year seasonal average of 1.18 million tonnes.

The August crack for 180 cst FO is higher at  -$5.85 /bbl with the visco spread at $1.65 /bbl.

Click Here for a graphical depiction of Fuel Oil stocks by region.

No fresh action 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

Leave a Comment