Crude Oil
Oil dropped towards $50 a barrel on Tuesday as the impact of the new virus strain continued to worry investors.
Brent crude futures for February settled 83 cents lower at $50.08 a barrel, while WTI futures fell 72 cents to $ 47.25 per barrel.
Apart from the impact of the new virus strain, we had already pointed out that crude prices had reached pre Covid levels without demand being anywhere close to the levels prevailing then. Therefore, in our opinion, the retracement in prices was almost inevitable.
The OPEC+ group is set to boost output by 500 kbpd January. Russian Deputy Prime Minister Alexander Novak on Monday said the rise in output should not result in a glut.
India’s crude oil imports rose to 18.28 MMT in Nov’20, jumping 20% MoM, while exports of oil products fell 33.8% YoY to 4.06 MMT, data from the PPAC showed on Tuesday.
Indian crude oil throughput in Nov’20 was up 16% MoM, but down 5.1% YoY at 5.08 MB/D. Indian refiners operated at an average rate of 101.2%, the most since Feb’20 and up from 86.7% in Oct’20, the data showed.
China’s crude oil production in 2020 is set to reach 194 MMT, equivalent to 3.87 MB/D, a 1.6% YoY increase, and the highest annual output total since 2016, according to data from the NBS.
UK oil production climbed by 20% YoY to 975 KB/D in Oct’20, but was down 7% YoY over the Jan-Oct’20 period, as intensive maintenance activity eased off, according to preliminary official figures published 22 Dec’20.
Venezuela has resumed direct shipments of oil to China after US sanctions sent the trade underground for more than a year, according to Refinitiv Eikon vessel-tracking data and internal documents from PDVSA.
api data
The API data showed a surprise build in both crude and distillates against expected draws. This seems to negate the theory of anticipated increase in demand. We shall await the DOE figures tonight.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 1,722,848 (+13,180 DoD) yesterday. The total number of active cases rose by around 90,000 over the weekend to 21.51 million. (Click here for details).
Naphtha
Spot naphtha premiums for north Asian buyers stayed firm on Tuesday.
The January crack is lower at $0.60 /bbl.
Gasoline
No fresh news on the Asian gasoline markets.
The January crack is higher at $3.35 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel narrowed by a cent to 15 cents per barrel to Singapore quotes on Tuesday.
Asia’s refining margins for jet fuel dipped on Tuesday but remained within close sight of multi-month highs touched last week, supported by seasonal heating demand for kerosene and a slow but gradual recovery in regional aviation demand.
Supporting a steady uptick in aviation demand, scheduled flights operating globally were 40.5% lower in the week to Monday, an improvement from 43.5% a week earlier. Flights in India were down 34.2% year-on-year in the week to Dec. 21, compared with a 36.4% drop in the preceding week, while flights in Australia were 38% lesser from the corresponding period last year, as against a 45.5% drop in the previous week.
The January crack for 500 ppm Gasoil is higher at $5.40 /bbl with the 10 ppm crack at $ 6.20 / bbl. The regrade is at -$ 0.75 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% Jan/Feb VLSFO time spread firmed to plus 25 cents a tonne on Tuesday, up from a $1 per tonne discount on Monday. VLSFO cash discounts also narrowed to minus 28 cents a tonne to Singapore quotes from minus $1.40 a tonne in the previous session.
By contrast, the HSFO cash differential flipped to a discount on Tuesday for the first time since mid-October at minus 24 cents a tonne to Singapore quotes, down from a premium of $1.95 a tonne on Monday.
The January crack for 180 cst FO is lower at -$2.05 /bbl with the visco spread at $0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity 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 refinery.
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.