Crude Oil
Oil prices closed marginally higher amid thin trade ahead of the year end season. Brent crude settled 25 cents higher at $66.39 a barrel, and WTI rose 8 cents to $60.90 a barrel.
Russian Energy Minister Alexander Novak said on Monday that the OPEC+ group may consider easing the output restrictions at its meeting in March. Non-OPEC global supply is expected to rise next year due to higher output from countries including the United States, Brazil, Norway and Guyana, which became an oil producer last week.
Another source of more oil could emerge in the coming months after Kuwait indicated that a longstanding dispute over the “Neutral Zone” on its border with Saudi Arabia will be resolved by the end of 2019. Production at two large oil fields in the Neutral Zone was halted more than three years ago, cutting output by some 500,000 barrels per day.
Naphtha
Asia’s naphtha rose to a four-session high of $91.98 a tonne on Monday, supported by demand, although spot premiums came under pressure due to squeezed petrochemicals margins.
Japan’s Asahi Kasei bought naphtha for second-half January delivery at premiums below $25 a tonne to Japan quotes on a cost-and-freight (C&F) basis but pegged to a formula which takes part of the second-half December pricing. South Korea’s SK Energy and Lotte Chemical as well as Malaysia-based Titan were also seeking naphtha but the results were not known. These purchases came shortly after China’s CNOOC and Taiwan’s CPC and Formosa were out to buy cargoes on Friday.
Formosa, Asia’s top naphtha importer, paid a premium in the low $20s a tonne on a C&F basis for some 100,000 tonnes of open-specification naphtha for Feb. 11-20 arrival at Mailiao. This was, however, sharply down from a record high it had paid on Dec. 11 for cargoes scheduled for second-half January arrival at more than $35 a tonne.
The January crack is higher at – $ 3.45 / bbl.
Gasoline
No fresh news on the gasoline markets.
The January crack is higher at $ 6.55 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10 ppm sulphur content climbed to 78 cents per barrel over Singapore quotes, their highest in more than two weeks. The gasoil cash differentials were at a premium of 77 cents a barrel on Friday.
The January/February time spread for 10 ppm gasoil widened its backwardated structure by 4 cents to trade at a premium of 42 cents a barrel on Monday.
Cash differentials for jet fuel narrowed their discounts to 2 cents per barrel to Singapore quotes, backed by a couple of firmer deals in the physical trading window in Singapore. They were at a discount of 11 cents a barrel on Friday..
The January crack for 500 ppm Gasoil is lower at $ 14.40 /bbl with the 10 ppm crack at $ 15.20 / bbl. The regrade is at $ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month 0.5% VLSFO crack slipped on Monday, edging away from a record high in the previous session. The January VLSFO crack was at $26.83 a barrel against Dubai crude, down from a record $28.56 a barrel on Friday. The downside potential for VLSFO refining margins are limited, however, as demand for the fuel is expected to remain strong with the global sulphur cap in marine fuels kicking in at the start of 2020.
The January 180 cst crack is lower at -$ 18.70 / bbl with the visco spread at $ 2.15 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action for 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.