Crude Oil
Oil futures were caught in the grip of uncertainty as the US-China trade deal fell into the distance but OPEC+ raised murmurs about deeper cuts. Brent crude futures dipped 10 cents to settle at $60.82 a barrel. WTI rose 14 cents to settle at $56.10 a barrel.
U.S. President Donald Trump said a U.S.-China trade agreement might have to wait until after next November’s presidential election, denting hopes of a quick resolution to a dispute that has weighed on the world economy.
The OPEC+, are discussing a plan to deepen a supply cut of 1.2 mbpd by a further 400 kbpd and extend the pact until June. Saudi Arabia is pushing the plan to boost the market before the initial public offering of state-owned Saudi Aramco.
A senior official at the International Energy Agency (IEA) said OPEC producers were unlikely to change their output curbs until the market outlook becomes clearer. Russian Energy Minister Alexander Novak said he expected this week’s meeting to be constructive but added that Moscow had yet to finalize its position.
France and the EU said on Tuesday they were ready to retaliate if the US President acted on a threat to impose duties of up to 100% on French products worth $2.4 billion, which follows a finding that a new digital services tax in France would harm US technology companies.
US crude exports could touch 4 MB/D for the first time ever in coming months, thanks to rising demand for low-sulfur crudes and the completion of pipeline and export projects along the US Gulf Coast, traders, analysts and shipbrokers said.
Hedge funds resumed heavy buying of crude oil and petroleum products last week, with the previous week’s bout of profit-taking halted by increasing optimism over the global economy and hopes for more output cuts by Saudi Arabia.
api data
Crude inventories fell by 3.7 million barrels in the week to Nov. 29 to 445.9 million, data from industry group the American Petroleum Institute showed. Analysts had expected a fall of 1.7 million barrels. Official government data is due on Wednesday.
Naphtha
Asia’s naphtha crack slipped further away from recent highs on Tuesday but remained supported by tight arbitrage supplies and demand for gasoline blending. The naphtha crack fell $1.03 a barrel from the previous session to $110.50 a tonne on Tuesday. The naphtha margin hit a near two-year high of $123.73 a tonne on Friday.
Qatar Petroleum announced a 5-year naphtha sale agreement with Shell to supply 900,000 tonnes of full-range naphtha and plant condensate per year starting April 2020.
The December crack is lower at – $ 1.75 / bbl.
Gasoline
Asia’s gasoline crack also eased to $8.19 a barrel on Tuesday, down 58 cents from the previous session. Rising crude prices helped pressure the gasoline margins.
The December crack is lower at $ 8.15 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10 ppm sulphur content rose to 34 cents a barrel to Singapore quotes, a level not seen since Nov. 18. They were at a premium of 19 cents a barrel on Monday. The prompt-month time spread for 10 ppm gasoil , which has remained in backwardation since July, widened on Tuesday to trade at a premium of 40 cents a barrel.
Cash differentials for jet fuel narrowed their discounts to 31 cents per barrel to Singapore quotes on Tuesday, compared with a discount of 36 cents per barrel a day earlier.
The December crack for 500 ppm Gasoil is steady at $ 13.10 /bbl with the 10 ppm crack at $ 14.05 / bbl. The regrade is at $ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Physical trade activity in Asia’s 0.5% very low-sulphur fuel oil (VLSFO) jumped on Tuesday, keeping cash premiums of the relatively new marine fuel firm as demand continued to gain momentum ahead of the 2020 deadline to switch to the cleaner fuel. Reflecting the firming demand, the VLSFO front-month time spread also firmed to a three-session high of $4.50 a tonne on Tuesday, up from $2.75 a tonne in the previous session.
The December 180 cst crack is higher at -$ 23.65 / bbl with the visco spread at $ 1.35 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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 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.