Crude oil dropped dramatically yesterday in the face of the facts that OPEC has been unable to reach any commitment and the likelihood that production for the month of October was at a record high of 33.8 million barrels per day.
Brent contracts settled at $48.30 (expiring December contract) and $ 48.65 (current front month) / bbl. WTI settled at $ 46.86 / bbl.
The market seems to have totally discounted the probability of OPEC adhering to production quotas even if they were able to agree upon them.
In our personal opinion, this story led rally has come to an end. We do not discount the possibility of another rally, this time led by product demand, in the month of December.
The Naphtha market appears to have eased further amid unconfirmed reports of sales of product by BPCL, Reliance and the Chinese Chambroad Petrochemical.
Levels for the Naptha crack in November contniue to hover around Dubai flat.
The gasoline market though, particularly in the prompt seems to be quite tight with traders showing value for the November crack in excess of $ 12.5 / bbl. The crack is expected to stay tight through the next couple of months
Middle distillate cracks are extremely strong in the front with gasoil quoting at around $ 14.00 / bbl for November. However, the numbers seem to be all over the place. Forward cracks too appear to be strong with December quoting in excess of $ 13 / bbl.
No change in the view on Regrade which continues to be downgraded.
The fuel oil crack has strengthed back with a vengeance as November is showing a value below $2 / bbl. There seems to be a serious shortage of cutter stock requiring the usage of gasoil to generate the specifications required.
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.