Crude Oil
Oil inched up on Thursday on rising tensions in the Middle East and signs of improving Washington-Beijing trade relations, but a strong U.S. dollar limited price gains. Brent crude futures settled at $66.25 a barrel, gaining 25 cents. WTI crude settled at $61.18, rising 12 cents..
Over the weekend, the U.S. military carried out air strikes against the Iran-backed Kataib Hezbollah militia group. This morning, a claim by the US that they have killed Qasem Soleimani, the leader of the Iran revolutionary guards has sent oil prices shooting up nearly $ 2 /bbl at the time of writing. We believe that most of this will retrace, largely because it signals a reduction in military strife.
Russia reported record high 2019 oil and gas condensate production of 11.25 million bpd, beating the previous record of 11.16 million bpd set a year earlier, Energy Ministry data showed.
Iraqi oil exports fell to 3.428 mil bpd in Dec’19 from 3.5 mil bpd the previous month, the oil ministry’s spokesman said on Thursday.
Saudi Arabia has set its February Arab light crude oil official selling price to Asia at a premium of $3.70 versus the Oman/Dubai average, unchanged from January, according to a statement from state oil company Aramco on Thursday.
api data
U.S. crude stocks fell 7.8 million barrels in the week ended December 27, compared with analysts’ expectations for a decrease of 3.3 million barrels, data from the API showed on Tuesday. Official data from the EIA is due tonight having been delayed by two days by the New Year’s holiday.
Naphtha
Asia’s naphtha crack started the year at a two-week low of $80.43 a tonne on Thursday as weak petrochemical margins dragged.
South Korea’s LG Chem is bringing forward a partial maintenance plan at one of its two naphtha crackers to Jan. 13 amid weakening petrochemical margins. During the partial maintenance, its total overall January run rates at its two crackers, which have a combined capacity of 2.5 million tonnes per year, will be lowered to 95% from full tilt. At least four other crackers in North and Southeast Asia were said to have trimmed runs, but this could not be independently confirmed.
The last time crackers across Asia cut runs to combat bad margins was in 2008 during the global financial crisis.
The January crack is higher at – $ 3.85 / bbl.
Gasoline
No fresh news on the gasoline markets. Light Distillate stocks in Singapore dropped by over a million barrels to a four week low of 11.60 million barrels.
The January crack is lower at $ 5.80 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil dropped to 56 cents per barrel over Singapore quotes on Thursday, compared with a premium of 77 cents per barrel in the last trading session on Tuesday.
Cash premiums for jet fuel were at 29 cents per barrel to Singapore quotes on Thursday, compared with a premium of 26 cents per barrel on Tuesday.
Middle Distillate stocks in Singapore rose by 294 kb to 10. 79 million barrels in the week ended January 1.
The January crack for 500 ppm Gasoil is lower at $ 14.70 /bbl with the 10 ppm crack at $ 15.50 / bbl. The regrade is at -$ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO crack inched up on Thursday, lingering close to a record high touched earlier in the week, a day after the IMO global sulphur cap on marine fuels came into effect.
The front-month VLSFO crack edged higher to $28.48 per barrel above Brent crude during Asian trading hours on Thursday, compared with $28.44 per barrel on Tuesday.
Meanwhile, the 380-cst barge crack for February narrowed its discount to minus $26.04 a barrel on Thursday, compared with minus $26.89 on Tuesday.
Asia’s cash premium for 380-cst HSFO was at $18.85 per tonne to Singapore quotes on Thursday, compared with $18.35 in the last trading session on Tuesday.
The January 180 cst crack is steady at -$ 19.85 / bbl with the visco spread at $ 1.45 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Middle Distillate Cracks for 4Q20 have shot up by more than 75 cents with little immediate reason to account for the same. We shall lay on a tranche of 4Q20 10ppm Gasoil Dubai at the current value of $ 18.85 / bbl. We shall also lay on a tranch of Cal 21 Jet cracks at $ 19.30 /bbl
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.