Crude Oil
Oil futures were steady to slightly firmer on Thursday despite OPEC and its allies planning one of the deepest output cuts this decade to prevent oversupply. Brent crude futures rose 39 cents to settle at $63.00 a barrel. WTI was unchanged at $58.43 a barrel.
A ministerial panel of key members of the OPEC+ group, recommended deepening output cuts by 500,000 barrels per day (bpd) in the first quarter of 2020. However, the deal would apply for an unexpectedly short period of the first three months of 2020, without an extension that the markets had been eyeing, and would exclude condensates from the cuts for the non-OPEC allies, like Russia.
US-China trade talks are “moving right along,” the US President said on Thursday, striking an upbeat tone even as Chinese officials held fast to their line that existing tariffs must come off as part of an interim deal to de-escalate the 17-month trade war between the two powers.
The Reserve Bank of India kept its key lending rate on hold in a shock decision that spooked markets on Thursday, even as it slashed its growth forecast for the economy to its lowest level in over a decade. It had been widely expected to deliver its sixth interest rate cut of the year.
The oil industry had feared refiners would not be able to make enough diesel and VLSFO for IMO2020, but delays appear to be more down to a lack of refuelling barges than the fuel itself, with sources saying that major ports are running 10 days behind schedule across fuel types
Global air passenger traffic in Oct’19 was 3.4% higher year on year, according to the International Air Transport Association Thursday, down from 3.9% in Sep’19 amid a softer performance in domestic markets.
Naphtha
Asia’s naphtha crack edged higher on Thursday after falling for three consecutive sessions, boosted by expectations of near-term supply shortages. Signs of improved naphtha output following maintenance shutdowns helped ease naphtha crack values from near 2-1/2 year highs last week. The naphtha crack climbed $6.65 a barrel from the previous session to $109.45 a tonne on Thursday.
The December crack is higher at – $ 2.00 / bbl.
Gasoline
No fresh news on the gasoline markets. Light distillate stocks in Singapore rose by 22 KB to 11.26 million barrels a four week high.
The December crack is lower at $ 8.20 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10 ppm sulphur content rose to 84 cents a barrel to Singapore quotes, the highest since Nov. 5.
Cash differentials for jet fuel were at a discount of 36 cents per barrel to Singapore quotes, as against a 31-cent discount in the previous session.
Middle distillate stocks in Singapore fell by 78 KB to 10.84 million barrels.
The December crack for 500 ppm Gasoil is higher at $ 12.90 /bbl with the 10 ppm crack at $ 13.85 / bbl. The regrade is at -$ 0.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The VLSFO-MGO price spread has traded at about $30 per tonne this week. Demand for VLSFO has accelerated in recent weeks as ship operators scramble to secure supplies ahead of the 2020 sulphur cap deadline.
Bunker barge availability has been limited as operators rush to flush their cargo tanks to carry the cleaner burning fuels.
Singapore fuel oil inventories climbed to 22.12 million barrels in the week ended Dec. 4, their their highest since June.
The December 180 cst crack is higher at -$ 24.30 / bbl with the visco spread at $ 1.40 /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.
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.