Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil prices rose on Wednesday for the first time in three days after data showed that US crude stockpiles resumed their downtrend last week following a surprise hike the previous week.

Brent Crude futures finished the session up 28 cents, or 0.4%, at $74.74 per barrel. WTI crude futures settled up 74 cents, or 1%, at $72.39 per barrel.

The US Federal Reserve decided to maintain interest rates near zero at its latest policy meeting that ended on Wednesday, as expected.

DOE data

Data released by the DOE was more or less in sync with the API barring the draw in gasoline being substantially lower.

The high levels of distillated demand also show that trucking and commercial activity is resuming which should be really supportive for the economy.

At a global level, the death toll from the COVID-19 virus rose to 4.20 Million (+10,132 DoD) yesterday. The total number of active cases rose by 250,000 DoD to 14.37 million. (Click here for details).

The daily death toll has crossed the 10,000 mark for the first time since June 10. This is a worrisome indicator


Asia’s naphtha crack dipped on Wednesday with the month’s trading cycle coming to a close after two cracker operators bought cargoes for first-half September delivery at higher premiums, traders said.

Asia’s naphtha crack slipped to $140.85 per tonne on Wednesday, from $142.15 on Wednesday.

The August crack is higher at $3.90 / bbl

Asia’s gasoline margin edged up on Wednesday as firm summer demand continued to support.

Asia’s gasoline crack  rose 10 cents to $8.87 per barrel on Wednesday.

However, the summer rebound in global fuel demand could be turning into a slowdown, as analysts expect gasoline consumption to taper off due to resurgent coronavirus cases and structural changes in commuting patterns. Countries in Asia are restricting movements again, affecting travel patterns. Indonesia, Asia’s top importer of gasoline, is grappling with the worst coronavirus outbreak in Asia.

Light distillates stocks at Fujairah Oil Industry Zone rose for the first time in four weeks, up 454,000 barrels to 7.079 million barrels for the week ended July 26, according to industry information service S&P Global Platts.

The August crack is lower at $10.95 / bbl

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

Cash differentials for gasoil with 10 ppm sulphur content were a cent lower at a premium of 3 cents per barrel on Tuesday.

Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 21.1% to 2.7 million barrels in the week ended July 26, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 3.8 million barrels this year, compared with 4.2 million barrels in 2020, Reuters calculations showed.

Cash differentials for jet fuel  were a cent lower at a discount of 19 cents per barrel to Singapore quotes on Wednseday.

Asia’s cash discounts for jet fuel widened on Wednesday amid muted buying interests in the physical market, while airlines continued to trim their scheduled capacity for the coming months.

The Jet crack rose 21 cents to $5.63 per barrel over Dubai crude on Wednesday.

Airlines across the globe have removed 2.6 million seats this week from their July capacity, which is now expected to be at 355.9 million seats, 18.5% higher than June, but 32% lower compared with July in pre-pandemic 2019, according to aviation data firm OAG

The August crack for 500 ppm Gasoil is lower at $6.55 /bbl with the 10 ppm crack at $ 7.85 /bbl. The regrade is at -$ 0.90 /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 crack rose on Wednesday, ending a four session losing streak.

The front-month VLSFO crack rose to $11.53 a barrel above Dubai crude, up from a near two-month low of $11.27 at the start of the previous week, Refinitiv data on Eikon showed.

Similarly, the VLSFO cash premium and front-month time spread also edged higher on Thursday after coming off of their recent highs hit in mid-July.

Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 552,000 barrels, or about 87,000 tonnes, to 11.21 million barrels, or 1.77 million tonnes, data via S&P Global Platts showed. Fujairah’s fuel oil inventories were 23% lower than year-ago levels.

The August crack for 180 cst FO is higher at  -$5.80 /bbl with the visco spread at $1.70 /bbl.

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

We shall hedge the September Jap-Nap Dubai crack at current value of $4.10 per barrel 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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