Crude Oil
Oil prices continued to rise in the absence of any fresh data. Brent crude settled 81 cents higher at $67.20 a barrel, and WTI rose 59 cents to $61.11 a barrel.
The market also rose as U.S. President Donald Trump said on Tuesday he and Chinese President Xi Jinping will have a signing ceremony to sign the first phase of the U.S.-China trade deal agreed to this month.
Russia has reduced its oil output excluding gas condensate by 240 KB/D so far in Dec’19 compared with levels in Oct’18, the baseline month, the Interfax news agency quoted the Russian Energy Minister as saying on Wednesday.
A deal signed on Tuesday between Kuwait and Saudi Arabia on the Neutral Zone between the two countries could add to supply next year. The agreement aims to end a five-year dispute between the OPEC members and reopen fields which can produce 0.5 million bpd. U.S. oil major Chevron Corp, which helps operate the fields, said full production was expected within 12 months.
PetroChina has provisionally chartered an Aframax tanker, Seamagic, at a record US-Europe freight rate of 300 WS translating to about $100,000/D, surpassing the previous peak of 245 WS, reflecting strong demand for low-sulfur US crude.
China’s crude oil imports from top supplier Saudi Arabia hit a record high in Nov’19, rising more than 25% YoY to 8.21 MMT, or 2 MB/D. That compared with Oct’19’s all-time high of 1.98 MB/D and 1.6 MB/D in Nov’18, data from General Administration of Customs showed on Wednesday.
China has issued non-state crude oil import quotas totalling 103.83 MMT in its first batch of allowance for 2020. Non-state crude oil import quotas for the whole year of 2020 were set at 202 MMT, China’s commerce ministry said in Nov’19.
api data
US crude oil stocks fell more than expected in the most recent week while gasoline and distillate inventories increased, data from the API showed on Tuesday. While gasoline inventories increased less than expected, distillate inventories rose more than expected.
Naphtha
Asia’s naphtha crack extended gains to touch a 1-1/2 week high of $98.25 a tonne on Tuesday, but this was 21% lower compared with Dec. 12 when the value was near a two-year high.
Asian crackers have either trimmed runs or were contemplating to do so in view of bad petrochemical margins caused by high naphtha feedstock costs and abundant petrochemical supplies. However, the specific run cuts of crackers could not be independently confirmed.
Some end-users were seeking naphtha, which remains the dominant raw material for crackers as alternative liquefied petroleum gas (LPG) typically replaces less than 20% of the former in most cases. But costs of LPG, a commodity which is also needed for heating during winter, have also increased.
The January crack is marginally higher at – $ 3.40 / bbl.
Gasoline
No fresh news on the gasoline markets. Light distillate stocks in Fujairah increased by 517 KB to 6.08 million, the third consecutive weekly rise.
The January crack is higher at $ 6.80 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil fell to 67 cents per barrel over Singapore quotes, hurt by muted demand for physical cargoes. They were at a premium of 78 cents a barrel on Monday.
Cash differentials for jet fuel were at a premium of 13 cents per barrel to Singapore quotes, compared with a narrow discount of 2 cents per barrel on Monday.
The jet fuel cracks in Singapore were currently about 2.9% lower than its seasonal level for this time of the year in the last three years. The likelihood of higher refinery runs in the wake of International Maritime Organization (IMO) rules in 2020 would keep the jet fuel market well supplied in the near term, but Chinese New Year holiday in January is expected nudge up some aviation demand.
Middle distillate stocks in Fujairah rose to 4.93 million increasing by almost 900 KB. Stocks are currently just short of a record high seen in mid February, 2019.
The January crack for 500 ppm Gasoil is lower at $ 14.35 /bbl with the 10 ppm crack at $ 15.15 / bbl. The regrade is at $ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s cash premiums for 380-cst HSFO slipped on Tuesday as demand for the dirty residual fuel grade shifts to cleaner marine fuels ahead of a sulphur cap starting in January. The cash premium for 380-cst HSFO was at $10.65 per tonne to Singapore quotes on Tuesday, compared with $10.79 per tonne a day earlier.
The 380-cst barge crack to Brent crude for January widened to a discount of minus $26.74 a barrel, from minus $26.54 on Monday. The front-month refining margins, which hit a record low of minus $33.46 a barrel on Nov. 29, are expected to get some support around current levels, thanks to emerging demand from refining and power generation.
Asia’s front-month 0.5% VLSFO crack edged lower to $26.45 a barrel to Brent, compared with $26.83 a barrel on Monday.
Fuel Oil stocks in Fujairah increased marginally by 69 kb to 11.24 million barrels.
The January 180 cst crack is lower at -$ 19.90 / bbl with the visco spread at $ 1.90 /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.