Crude OilNaphthaGasolineDisitllatesFuel OilHedge Strategy

Oil closed down almost $6 a barrel on Tuesday, with global crude benchmark Brent falling beneath key $100 pricing, after a pro-Tehran television station out of London reported that Iran and the United States have reached a deal to revive a nuclear deal that could legitimately put the Islamic Republic’s oil back on the export market.

Brent settled down $5.78, or 5.5%, at $99.31 per barrel, after falling more than $6 earlier to a session low of $97.55. Brent had closed Monday’s session up almost 4%. The October contract expires on Wednesday and the more active November contract was at $97.84, down 4.9%.

WTI settled down $5.37, or 5.5%, at $91.64 per barrel after a session low of $90.56. Just a day earlier, WTI had jumped 4.2%.

With inflation near double-digit territory in many top economies, central banks could resort to more aggressive interest rate increases, slowing economic growth and fuel demand. German inflation in August rose to its highest in almost 50 years, data showed. Hungary’s central bank raised its base rate by 100 basis points to 11.75%.

In Europe, higher natural gas prices in Europe were spurring power generators and industrial users to switch to diesel and fuel oil, further supporting crude prices.

api data

While the surprise build in crude was bearish, the product draws are definitely supportive. We await official data today.

Asia’s refining profit margins for naphtha and gasoline tanked on Tuesday, amid poor fuel demand in major oil-importing economies like China. Asia’s naphtha crack slumped to a discount of $103.93 a tonne, the lowest level since June 15, from a discount of $86.63 in the last session.

The September crack is lower at -$ 23.30 per barrel 

Asia’s gasoline refining profit margin extended declines on Tuesday amid persistent weakness.

The gasoline crack slipped to $3.42 a barrel, the weakest since July 25, from $5.47 a barrel on Monday.

China’s refined fuel consumptions fell 8.6% in July to 28.3 million tonnes year-on-year, the country’s state economic planner said, under tough COVID-19 curbs that stifled mobility and economic activities.

The September crack is lower at $3.60 per barrel.

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

Asia’s refining margins for gasoil with 10 ppm sulphur content extended losses for a third consecutive session on Tuesday, as worries over slowing demand in top consumer China weighed after data showed weak year-on-year demand growth.

Cash differentials for 10 ppm gasoil stood at a premium of $2.01 a barrel to Singapore quotes, up from $1.96 in the previous session.

Refining margins or cracks for 10 ppm gasoil fell to $47.84 a barrel over Dubai crude in Asian trading hours, compared with $52.13 on Monday.

Cash differentials for jet dipped to a premium of $2.18 a barrel to Singapore quotes, up from a premium of $2.25 a barrel in the previous session.

China’s refined fuel consumption fell 8.6% in July year-on-year, as jet aviation fuel demand fell 20.5%, from the year-ago levels, while diesel fuel rose 4.9%, according to the National Development and Reform Commission.

The September crack for 500 ppm Gasoil is higher at $44.45 /bbl with the 10 ppm crack $48.45 /bbl. The 10 ppm regrade is at -$6.30 /bbl.

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

Asia’s refining crack for 180-cst high sulphur fuel oil (HSFO) slumped to multi-year lows on Tuesday as abundant Russian supplies and retreating summer demand weighed on the market.

The front-month 180-cst HSFO crack was at a discount of $24.17 per barrel at the Asia close (0830 GMT) on Tuesday, hitting its lowest since December 2019, Refinitiv data showed. .

“The outlook for regional HSFO production shows no signs of slowing down and imports of Russian origin products continue to add weight to supply,” said Timothy France, Refinitiv’s senior oil analyst for MENA.

Cash differentials for HSFO were little changed on Tuesday amid an absence of trades, after coming under slight pressure in recent trading sessions.

The 380-cst HSFO cash differential edged 31 cents lower to a premium of $3.75 per tonne on Tuesday, reflecting a weaker day-on-day market structure.

Meanwhile, the cash differential for 0.5% very low sulphur fuel oil fell $2.48 to a premium of $5.99 per tonne, as lower offers emerged versus the previous day.

The September crack for 180 cst FO is higher at – $22.00 /bbl with the visco spread at $3.80 /bbl.

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

No fresh trades 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

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