Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Barely 24 hours after oil’s sharpest selloff since early October, bulls were back to buy the dips and bring U.S. crude to a higher settlement on Thursday.

Brent crude  finished the session down 26 cents, or 0.3%, at $84.32. Brent hit a three-week low of $81.62 earlier in the session, after losing 2% on Wednesday.

WTI crude settled up 15 cents, or 0.2%, at $82.81 per barrel. WTI hit a two-week low of $80.67 earlier in the session. On Wednesday, it fell 2% for its sharpest loss in three weeks.

According to Barani Krishnan of,

Thursday’s recovery from session lows were aided by two things. The first was oil bulls’ realization that the three-year low in crude inventories at the Cushing, Oklahoma storage hub was a better play on the market’s psychology than any possibility of Iran and Western nuclear inspectors achieving a deal that could remove sanctions on Tehran’s crude exports.

The second was the magic mantra OPEC+ never fails to use before the start of each monthly meeting: that supply will get even more short in the coming month or quarter.

Helping the oil narrative is, of course, OPEC+ whose mission is to ensure that global output of crude remains at about a fifth of immediate needs. In any ordinary market, that would be deemed as deliberate stifling of natural production to create a lopsided market. But in OPEC terminology, it’s called “rebalancing”. (We have been saying the same ourselves for the past several years)

“The rally has looked overcrowded for some time now so the correction we’ve seen doesn’t come as a great surprise,” Craig Erlam, analyst at online trading platform OANDA, said. “The question though is whether that’s it? It’s interesting how quickly traders have bought the dip.”

At a global level, the death toll from the COVID-19 virus rose to 5.00 Million (+8,597 DoD) yesterday. The total number of active cases fell by 10,000 DoD to 18.01 million. (Click here for details).

Asia’s naphtha crack rose on Thursday after crude oil prices eased amid surprise jump in U.S. inventories.

The refining profit margin rose to $160.38 per tonne from $155.28 in the last session, while the prompt inter-month spread widened in backwardation to $10.50 a tonne.

The margin has risen 21% this month on the back of firm feedstock demand from petrochemicals.

The November crack is higher at $4.80 / bbl.

Asia’s gasoline crack eased but remained strong above $16 a barrel after Singapore and U.S. stocks shrank.

The crack slipped to $16.90 per barrel from $18.72 in the last session. The refining profit margin for gasoline has remained firm this month due to a rise in consumption in countries like Indonesia and India after easing of COVID-19 curbs.

Singapore’s inventories of light distillates fell by 157,000 barrels to a two-week low of 12.187 million barrels in the week to Oct. 27, official data showed.

The November crack is higher at $13.40 / bbl.

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

Asia’s cash differentials for 10 ppm gasoil fell by a cent to a premium of 62 cents per barrel to Singapore quotes.

Singapore’s middle distillate inventories rose 9.9% to 10.8 million barrels in the week to Oct. 27, bouncing back from a 22-month low touched last week, according to Enterprise Singapore data. This week’s stocks were 31.9% lower than a year earlier.

Cash differentials for jet fuel were at a premium of 12 cents per barrel to Singapore quotes, 2 cents higher from a day earlier.

The front-month time spread for jet fuel, which has stayed in backwardation since the beginning of this month, traded at 40 cents per barrel on Thursday, compared with 38 cents on Wednesday.

Refining margins for jet fuel, which also determine the profitability of kerosene, slipped to $11.95 per barrel over Dubai crude during Asian trading hours, compared with $12.26 per barrel a day earlier.

The November crack for 500 ppm Gasoil is lower at $11.70 /bbl with the 10 ppm crack at $ 13.20 /bbl. The regrade is at -$ 0.10 /bbl. 

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

Asia’s 180-cst high-sulphur fuel oil (HSFO) cash premium extended declines, sinking to a near four-month low as weak high-sulphur feedstock consumption from utilities failed to provide support beyond the typical summer demand season.

180-cst HSFO cash premiums slipped to 25 cents a tonne to Singapore quotes, the lowest since June 30, amid absent deal activity in the Singapore window and a weakening prompt market structure.

In the low-sulphur market, the front-month 0.5% very low-sulphur fuel oil (VLSFO) crack also extended losses, falling to a near three-week low of $12.55 a barrel above Dubai crude, despite weaker crude oil prices.

Onshore fuel oil stocks rose by 109,000 barrels, or about 17,000 tonnes, to a seven-week high of 21.8 million barrels, or 3.43 million tonnes, Enterprise Singapore data showed. The stocks are 6% lower from year-ago levels and below the 2021 weekly average of 22.76 million barrels.

Fujairah Oil Industry Zone inventories for heavy distillates and residues were 44,000 barrels, or about 7,000 tonnes, lower to 7.71 million barrels, or 1.21 million tonnes, data via S&P Global Platts showed. The inventories were 23% lower than year-ago levels.

The November crack for 180 cst FO is higher at  -$7.95 /bbl with the visco spread at $1.95 /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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