Crude Oil
Oil rose on Thursday after a survey showed OPEC’s commitment to its supply cuts remains in place, even as U.S. production topped 10 million barrels per day for the first time since 1970. On its first day as the front-month, the Brent crude future for April delivery rose 76 cents to settle at $ 69.65 /bbl. WTI jumbed by $ 1.07 to close at $65.80 /bbl.
A decline in the US dollar added further support to prices as well. Also supporting Thursday’s crude market was a note from Goldman Sachs boosting their oil price target. Goldman Sachs raised its three-month forecast for Brent to $75 from $62 and its six-month forecast to $82.50 from $75.
In January, both benchmarks rose for a fifth month in a row with Brent up 3.3 % and WTI up 7.1 %, marking the strongest start to a year for Brent in five years and WTI in 12 years.
Oil output in the Organization of the Petroleum Exporting Countries (OPEC) rose in January from eight-month lows as higher output from Nigeria and Saudi Arabia offset declines in Venezuela and strong compliance with the OPEC-led supply pact.
Naphtha
The Asian jumped 14.6 percent to reach a 1-1/2 week high of $83.98 a tonne on Thursday but traders said they expected the market’s supply outlook would limit gains.
Cargoes arriving this month from the West, including Europe and the Mediterranean, remained high at over 1.6 million tonnes. This was down from the 2 million tonnes for January, but February volumes are still expected to be high because February is the shortest month in the calendar year. Also, February cargoes were higher than 2017’s monthly average at about 1.2 million tonnes. The supply outlook has put pressure on spot prices in the last few weeks and they have fallen this week.
Although still positive, the balance February paper naphtha crack is valued slightly lower at $ 0.20 /bbl today.
Gasoline
Asia’s gasoline crack hit a 1-1/2 month high of $9.38 a barrel, supported by drawdown on stocks in the US.
While Singapore Gasoline stocks also fell , the fall was miniscule (only 15 kb). ARA stocks rose by around 400 kb.
The balance February paper 92 Ron gasoline crack has improved over yesterday to $ 12.80 /bbl.
Hedging recommendation made earlier are being retained (until they are squared off). Current values are juxtaposed in (Red)
March 2018 $ 13.35 / bbl (13.25 currently).
Distillates
Asia’s jet fuel market held firm as the front-month time spread traded higher on Thursday amid firm demand for the fuel. However, trade activity for physical cargoes of jet fuel remained muted in the Singapore window with no suppliers making offers for the fuel on Thursday.
Singapore onshore middle distillate stocks rose to a two-week high of 9.293 million barrels in the week to Jan. 31
The balance February paper gasoil crack has improved to $ 15.45 /bbl The 10 ppm crack is at $ 16.30 /bbl. The February regrade has posted a huge increase and is valued at $ 1.10 /bbl reflecting the strength in jet fuel.
Hedging recommendations made earlier are being retained (until they are squared off). Current values are juxtaposed in (Red)
February 2018 Gasoil 10 ppm $ 16.15/bbl (16.30) : Jet $ 15.50/bbl (16.60) (add more at $ 16.75 / bbl and $ 16.00 / bbl)
4Q 2018 Gasoil 500 ppm $ 15.35 /bbl (15.10): Gasoil 10 ppm $ 16.20 /bbl (16.05): Jet $ 16.00 /bbl (16.00).
1Q 2019 Gasoil 500 ppm $ 15.85 /bbl (15.70) : Gasoil 10 ppm $ 16.80 /bbl (16.70): Jet $ 16.55 /bbl (16.55)
We would also recommend hedging Cal 2019 (for aggressive hedgers) at
Cal 2019 Gasoil 500 ppm $ 16.10 /bbl (16.50): Gasoil 10 ppm $ 17.45 /bbl (17.25): Jet $ 16.85 /bbl (17.30)
Fuel Oil
Cash premiums of 380-cst fuel oil slipped for a second straight session to its lowest in more than one week on Thursday, while cash differentials of 180-cst fuel oil flipped to a narrow discount after trading at a premium for more than a week.
This came after official data showed Singapore onshore fuel oil inventories climb to a four-week high of 22.5 million barrels
The February 180 cst crack has come off and is valued at -$ 5.50 /bbl. The visco spread is unchanged at $ 0.90 / bbl.
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.
Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity