Crude Oil
Oil continued to rise on Friday with WTI settling at $ 51.68 /bbl, a rise of 62 cents and Brent at $54.46 / bbl, up 52 cents. This is the best week crude has had in over 5 years!!!
Prices were pressured by news that Russia’s production reached post Soviet record levels in November. Russia further said that any cuts would be based on THIS number unlike OPEC numbers which were October based. However, they found support when the White House announced that it expects President Barrack Obama to sign US legislation to extend sanctions against Iran for a further 10 years.
In what is a primarily a news driven market, we would like to draw attention to an observation made by the Petroleum Intelligence Weekly in its issue of last week where it stated
“Even if the OPEC adheres to its cuts, at an output level of 32.65 Mbp/d, inventory will build by 820 Kb/d. At these levels of production, inventories will only start decreasing in the 2nd half of the year. And, for now, the agreement is listed for 6 months.”
Therefore, there is considerable doubt about the efficacy of such cut, even if adhered to.
Naphtha
The prices of physical Naphtha for H2 Jan and H1 Feb (which are effectively the spot periods in the Platts Window) flipped into a small contango on Friday indicating a further easing in bullish sentiment. The physical Naphtha crack has lost about 23% in two trading days despite firm petrochemical demand. This has been ascribed to lack of availability of capacity to process Naphtha in Asia to cater to any incremental demand. Buyers continue to be of the opinion that supplies are plentiful.
The December crack is showing a value of just under Dubai
Gasoline
Gasoline seems to be holding its own notwithstanding builds in stocks across the globe.
The Gasoline crack for January is just under $11.0 / bbl, more or less the same as previous levels.
Middle Distillates
Hin Leong and Winson Oil continued to sell gasoil in the Platts window yesterday after having been the main purchases in November.
Nevertheless, the crack stayed firm with the gasoil crack for January showing a value of around $11.25 /bbl.
The regrade continues to show values of around $ 1.80 – 2.0 /bbl in January.
Fuel Oil
The physical crack for fuel oil fell to its lowest value in 5 weeks as strong demand was unable to overcome the high prices.
However, the January crack has improved following the rise showing a value of-$2.60 today, an improvement of around 60 cents / 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.