Crude Oil
Oil prices ended with full-year losses for the first time since 2015although crude oil futures posted modest gains on Monday. Brent settled up 59 cents at $53.80 a barrel, while WTI settled 8 cents higher at $45.41 a barrel.
For the year, U.S. West Texas Intermediate crude (WTI)futures slumped nearly 25 percent, while Brent tumbled more than 19.5 percent. But a desultory fourth quarter that saw buyers flee the market over growing worries about a supply glut and mixed signals related to renewed U.S. sanctions on Iran.
The market had been on track for solid gains for the year until October. However, in a bid to control prices, the United States granted larger-than-expected waivers to importers of Iran’s oil. The high prices also caused demand in emerging economies started to sag.
That combination dragged down both benchmarks from four-year highs above $76 a barrel and $86 a barrel, respectively, and even a late-year decision by OPEC+, to ratchet down output was not enough to restore bullish sentiment.
Oil prices fell more than a third this quarter, the steepest quarterly decline since the fourth quarter of 2014.
Money managers trimmed bullish wagers on U.S. crude to the lowest level in more than two years in the week to Dec. 18. New CFTC data will not be released until the partial shutdown of the federal government ends.
The outlook for 2019 is still uncertain, but far from bullish.
On the bearish side, we have
- growth in US production. While the growth is uncertain, particularly if prices fall significantly lower, people are still comfortable at this level.
- Slowdown of growth in China. The official manufacturing PMI declined in December 2018 for the first time in more than 2 years. Factory orders declined as both domestic and export sales continued to weaken.
- The rig count is at a nearly 3 year high of 885 rigs at the end of last week.
On the bullish side we have
- Iran.
The sanction waiver was granted for 6 months, but that will not prevent the US from enforcing it later.
- OPEC+
They have already signalled intent of a production cut. If Iran sanctions and enforced after the waiver, there could be a bullish impact on the market.
- End of Trade War.
The end of the trade war with China could signal a resumption of growth with optimistic implications for oil price growth.
Naphtha
No news on product markets today
The January crack has dropped to -$ 2.20 /bbl
Gasoline
No news on product markets today .
The January crack is marginally higher at $ 2.10 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
No news on product markets today
The January crack is higher at $ 11.50 /bbl with the 10 ppm crack at $ 12.45 /bbl. The regrade is steady at $ 2.70 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
No news on product markets today.
The January 180 cst crack is higher at $ 0.15 / bbl with the visco spread at $ 0.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Fuel oil cracks have strengthened once again. We also get our first look at Cal 20 cracks. With Jet and 10ppm Gasoil cracks being quoted more than $ 3 a barrel higher than Cal 19 cracks, we would like to put in a small hedge today itself.
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.
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.