Crude prices were near multi-year highs on Tuesday as market participants awaited the release of a weekly snapshot on U.S. inventories that gives an insight into demand against a global choke down on supply by the biggest oil producing countries.
Brent crude settled up 41 cents, or 0.5%, at $86.40 per barrel. Brent hit a three-year high of $86.70 in the previous session.
WTI crude settled up 89 cents, or 1.1%, at $84.65 per barrel. WTI hit a seven-year high of $85.41 on Monday.
A 2.1 million-barrel cargo of Iranian condensate, the most recent delivery from a swap pact between the Middle Eastern nation and Venezuela, is expected to begin discharging on Wednesday at a PDVSA port.
api Data
The API reported builds across the board. This has certainly caught the markets a bit by surprise. We await official data to be released today.
At a global level, the death toll from the COVID-19 virus rose to 4.98 Million (+7,535 DoD) yesterday. The total number of active cases rose by 40,000 DoD to 17.94 million. (Click here for details).
Asia’s naphtha crack gained for a second straight session and hit the strongest level since July 2014 amid firm feedstock demand.
The crack rose to $163.63 a tonne from $160.95 in the previous session. The refining profit margin for naphtha has risen over 23% this month.
The November crack is lower at $4.85 / bbl.
Asia’s gasoline crack extended gains on Tuesday and hit an over six-year high after analysts expected U.S. stocks to drop for a third consecutive week.
The refining profit margin surged to $17.40 a barrel, the strongest since Aug. 2015, from $15.46 in the last session. Margins have doubled this month with a rise in consumption triggered by the easing of COVID-19 restrictions in the region.
The November crack is higher at $15.00 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for 10 ppm gasoil fell 4 cents to a premium of 67 cents per barrel to Singapore quotes.
Refining margins, also known as cracks, for 10 ppm gasoil dipped for a sixth consecutive session on Monday to $13.84 per barrel over Dubai crude during Asian trading hours, down from $14.35 a barrel on Friday.
Cash differentials for jet fuel were at a premium of 8 cents per barrel to Singapore quotes on Tuesday, as against a 13-cent premium on Monday.
Asian jet fuel refining margins rose on Tuesday, supported by improving regional demand, while cash premiums for the aviation fuel dipped on muted buying interest in the physical market.
Refining margins or cracks for jet fuel climbed to $12.51 per barrel over Dubai crude during Asian trading hours, compared with $12.19 per barrel a day earlier.
Scheduled airline seat capacity in China slipped 4.8% this week, while flight capacities in Japan and Australia were both up 1.8%, according to aviation data firm OAG.
The November crack for 500 ppm Gasoil is lower at $12.45 /bbl with the 10 ppm crack at $ 13.95 /bbl. The regrade is at -$ 0.10 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month time spreads flipped to contango on Tuesday as sluggish demand and easing supply weighed.
The front-month time spreads of both 180-cst HSFO and 380-cst HSFO dropped to minus 25 cents a tonne each, from plus 25 cents and plus 50 cents a tonne, respectively, in the previous session.
Meanwhile, the front-month 0.5% very low-sulphur fuel oil (VLSFO) crack fell 76 cents to $12.74 a barrel above Dubai crude on Tuesday, despite weaker crude oil prices.
The November crack for 180 cst FO is lower at -$7.60 /bbl with the visco spread at $1.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We will hedge November and December Jap Nap Dubai at current values of $5.45 and $5.35 /bbl respectively. We will also hedge the November Gasoline crack at $14.90 per barrel.
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.