Crude Oil
Oil eased on Wednesday after a report showing U.S. crude and product inventories grew unexpectedly last week. Brent crude futures fell 21 cents to settle at $64.06 a barrel.. WTI fell 30 cents to settle at $58.11 a barrel.
Prices were still buoyant due to optimism that a U.S.-China trade deal would be reached soon.
WTI trade volumes lower ahead of the U.S. Thanksgiving holiday, with lots of front-month contracts trading down about 5% compared with the previous session.
Oil prices pared losses slightly after a report showing U.S. oil drillers reduced the number of drilling rigs for a record 12 months in a row. Drillers cut three oil rigs in the week to Nov. 27, bringing the total count down to 668, the lowest since April 2017.
The retail portion of Saudi Aramco’s IPO has been fully covered, with orders reaching 32.57 billion Saudi riyals ($8.7 billion), lead manager Samba Capital said on Wednesday.
Russia brought the ESPO pipeline to full planned capacity Wednesday, enabling the country to increase its market share in Asia and compete with its OPEC+ partner Saudi Arabia. ESPO 1 and ESPO 2 now have capacities of 1.6 MB/D and 1 MB/D respectively.
DOE data
U.S. crude stocks swelled by 1.6 million barrels last week as production hit a record high at 12.9 million barrels per day and refinery runs slowed. The more bearish news from the EIA was that U.S. gasoline inventories soared 5.1 million barrels, compared with expectations for a 1.2 million-barrel gain.
The material balance would seem to suggest that the crude stocks would have drawn marginally while the build in gasoline stocks is overstated.
Naphtha
Asia’s naphtha crack rose for the seventh straight session to 1-1/2 month high of $109.75 a tonne on Wednesday as supplies tightened on talk of refinery run cuts while maintenance is still ongoing at some of Asia’s and Middle Eastern plants.
Oil refineries including those in Singapore, South Korea, Rotterdam and parts of America are likely trimming runs to around 300,000 barrels per day due to weak profit margins. New refining capacity in Asia could possibly offset the run cuts. But unlike gasoline, naphtha is structurally short in Asia and any refinery run cuts taking place while naphtha crackers are at maximum operating rates could deepen the supply crunch.
The December crack is lower at – $ 1.40 / bbl.
Gasoline
No fresh news on the gasoline markets today.
The December crack is lower at $ 9.10 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10 ppm sulphur content were at 18 cents a barrel to Singapore quotes on Wednesday, 2 cents higher from a day earlier. The front-month time spread for 10ppm gasoil widened by 5 cents to trade at a premium of 20 cents a barrel on Wednesday.
Cash differentials for jet fuel were at a discount of 61 cents per barrel to Singapore quotes on Wednesday, compared with a discount of 62 cents on Tuesday.
The December crack for 500 ppm Gasoil is lower at $ 13.35 /bbl with the 10 ppm crack at $ 14.30 / bbl. The regrade is at $ 0.55 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) time spread to a 1-1/2-month high as demand for the IMO-compliant fuels continues to gain momentum ahead of global sulphur cap starting Jan. 1, 2020.
Demand for low-sulphur fuels currently represents about half of overall bunker fuel sales in key bunkering hubs, including Singapore and Fujairah.
The Dec/Jan VLSFO time spread jumped to a premium of $7 a tonne on Wednesday, up from a $1 a tonne premium in the previous session. However, price fluctuations in the relatively new VLSFO derivative contracts have been volatile amid relatively limited trade liquidity.
Meanwhile, residual fuel oil inventories in Fujairah were 1% lower in the week to Nov. 25, easing away from a record high of 15.425 million barrels. Inventories of IMO-compliant fuels in the Fujairah bunkering and trading hub have steadily risen in recent months as industry participants built fuel stockpiles ahead of the IMO’s global sulphur cap.
The December 180 cst crack is lower at -$ 23.30 / bbl with the visco spread at $ 1.50 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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 refiner.
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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.