Crude Oil
Oil prices edged higher on Friday, arguably due to weekend position taking. Brent crude futures rose 22 cents to settle at $62.51 a barrel. WTI crude rose 9 cents to settle at $57.24 a barrel.
Brent posted a weekly rise of 1.3%, while WTI gained 1.9%.
Oil prices fell earlier on Friday after Trump told reporters he has not agreed to roll back tariffs on China but that Beijing would like him to do so. However, the plan faces stiff internal opposition in the U.S. administration, and U.S. officials have signaled opposing views on the status of talks.
Volatility around U.S.-China trade talks made it hard for traders to be short over the weekend, despite earlier comments from Trump that he has not agreed to roll back tariffs on China. Money managers boosted their net long U.S. crude futures and options positions in the week to 5th Nov according to CFTC reports.
While customs data showed that China’s crude oil imports in October rose 11.5% from a year earlier to a record high, bearish signals elsewhere tempered the news. China’s Oct’19 PPI fell 1.6% y/y, steepest decline since Jul’16 but CPI rose at its fastest pace in almost 8 years, driven mostly by a surge in pork prices.
U.S. oil drillers cut 7 oil rigs in the week to 8th Nov, the third weekly reduction in a row, bringing total count down to 684, lowest since Apr’17.
Naphtha
Asia’s naphtha crack rebounded from a five-week low to $70.30 a tonne on Friday, supported by a strong gasoline profit-margin.
The November crack is higher at – $ 3.65 / bbl.
The December crack is at – $ 3.65 / bbl.
Gasoline
Asia’s gasoline crack hit a 3-1/2 week high of $9.54 a barrel as demand from Indonesia and India helped to soak up supplies.
HPCL was looking to buy 30 KT of 91.6-octane grade gasoline for Dec. 10-13 arrival at Mumbai and a total of 80 KT for November to December arrival at Vizag through tenders closing on Nov. 10. HPCL started importing gasoline on a regular basis this year as refineries in the country undergo upgrade works to produce cleaner fuels.
Gasoline stocks in ARA were at a two-week high of 807 KT in the week to Thursday after falling to their lowest in more than a year in the week to Oct. 31.
The November crack is higher at $ 8.50 /bbl
The December crack is at $ 7.45 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10ppm sulphur content fell to 53 cents per barrel to Singapore quotes on Friday, compared with 60 cents per barrel on Thursday. Refining margins for 10ppm gasoil dove to $15.48 per barrel over Dubai crude during Asian trade on Friday, a level not seen since July.
Gasoil stocks in ARA fell by 34 KT to 2.55 million tonnes in the week to Thursday.
Cash discounts for jet fuel were at 40 cents per barrel to Singapore quotes on Friday, unchanged from Thursday and levels not seen since mid-May. The jet fuel spot differentials are at their lowest November levels in the last three years.
The November crack for 500 ppm Gasoil is lower at $ 13.30 /bbl with the 10 ppm crack at $ 14.30 / bbl. The regrade is at $ 0.70 /bbl
The December crack for 500 ppm Gasoil is at $ 14.35 /bbl with the 10 ppm crack at $ 15.30 / bbl. The regrade is at $ 1.35 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for high-sulphur fuel oil (HSFO) tumbled in Asia as the deadline to switch to low-sulphur alternatives drew nearer, bringing with it a collapse in demand for high sulphur fuels.
380-cst HSFO cash premiums fell to a three-week low of $23.55 per tonne above Singapore quotes, down from $32.13 per tonne in the previous session.
Reflecting the weaker demand outlook, backwardation in the prompt-month Dec/Jan 380-cst time spread also narrowed by $3.25 to a six-month low of $3.75 per tonne a tonne on Friday.
Fuel oil stocks in ARA rose by 86 KT to 1.11 million tonnes in the week to Thursday.
The November 180 cst crack is lower at -$ 21.20 / bbl with the visco spread at $ 0.70 /bbl.
The December 180 cst crack is at -$ 21.30 / bbl with the visco spread at $ 1.30 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The regrade is rising as gasoil prices collapse. However, we believe that Jet will also follow in tandem. We will hedge the 1Q20 regrade at the current levels of $ 1.20 /bbl.
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 refiner.
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.