Crude Oil
Crude staged a minor recovery on Friday. Brent closed up 13 cents to settle at $57.54 /bbl while WTI gained 11 cents and settled at $51.67 /bbl.
As another quarter ends, there was happy news for the crude bulls as the gain in prices for this quarter beat several records.
Brent had a positive week for the fifth week in a row, its longest streak since June 2016. The contract posted a 10% rise in September and around a 19% rise in Q3. WTI too had its longest upward streak since January and the gains in the quarter were the best seen in more than 10 years.
Nevertheless, some bearish shadows hang around in the clouds. For one, OPEC production increased by 50 kbpd in September as per a Reuters survey. Secondly, the impact of high prices on US crude production will show up. The number of active rigs in oil drilling went up by 6 last week to touch 750. US production has bounced back in the two weeks since Harvey to touch record levels. Last but not least, there are indications of an economic recession in Saudi Arabia. The country can most likely emerge from recession by increasing supplies but not only will that impact oil prices now, but it could also impact the upcoming ARAMCO issue.
In other news, Kurds voted for secession by a 9 to 1 kind of majority. With most of the Arab world opposed to it, this could rein in prduction and boost prices.
Technical Analysis
The Brent daily chart has now begun to show signs of exhaustion with prices retreating from the top end of the rising channel. Prices have closed for the week with just above a Fibonacci support at $ 57.38/bbl. Failure to stay above this support will also have the MACD signal line cross into negative territory. Furthermore, it also shows the powerful ‘Three Black Crows Pattern” which normally signals the beginning of a reversal. We would therefore regard this support at $ 57.38 as key. It is also noteworthy that in the last week the 50 DMA crossed the 200 DMA from below and is still rising. Therefore there is no clear indication for now that prices are about to turn. In the weekly chart, prices made an attempt to break the rising channel but appear to have just about stayed within the channel. This makes the current area an interesting point with a support just below and the resistance just above. However, last week’s candle is virtually a gravestone doji, another signal pointing towards a reversal in the near future.
The immediate supports are at $57.38, $ 56.06 and $ 55.00, all Fibonacci levels. The immediate resistances are at $ 57.89, $ 58.55 and $ 59.51, all previous highs.
Naphtha
The naphtha crack has weakened further even as buyers are seen returning to the market after the end of the APPEC conference in Singapore.
Naphtha stocks held in the Amsterdam-Rotterdam-Antwerp (ARA) refining hub are up, hitting a four-week high of 274,000 MT.
The October crack is valued lower at $ 2.30 /bbl
Gasoline
The gasoline cracks have slid further in the face of rising inventories in ARA in contrast with falling stocks in Singapore. Gasoline stocks held independently at the storage facilities of Amsterdam-Rotterdam-Antwerp (ARA) refining hub was up around 3 % to a three-week high of 839,000 MT in the week to Sept. 28, with muted shipments to the United States
The October 92 Ron crack is valued lower today at $ 11.10 /bbl.
Distillates
The distillate cracks have strengthened as traders expect supplies to tighten in the fourth quarter as winter approaches and as several refineries are undergoing planned and unplanned maintenance.
The October crack is higher at $14.55 /bbl. The regrade has moved sharply to $ 0.05 /bbl
Fuel Oil
Fuel Oil cracks remain unchanged in the face of a balanced market wherein inventories and fresh supplues are offset by robust demand.
The October crack remains unchanged at -$2.55 / bbl. The visco spread also stays at $ 0.60 /bbl.
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