Crude Oil
Oil prices surged more than 3% on Wednesday on expectations that OPEC and allied producers would extend production curbs. Brent crude futures rose $2.18 to settle at $63.00 a barrel. WTI rose $2.33 to settle at $58.43 a barrel.
Iraqi oil minister Thamer Ghadhban told reporters in Vienna on Tuesday that “a deeper cut is being preferred by a number of key members”. On Wednesday, Ghadhban said he would support at least extending existing cuts to end-2020 from March. Some remained skeptical of whether OPEC+ will deepen cuts, though many analysts expect an extension of the existing supply pact.
A draw in US crude stocks also gave impetus to the rise.
A VLCC, the Nave Constellation, was hijacked Tuesday evening close to the Egina FPSO, off the coast of Nigeria, with 19 members of the crew kidnapped, the vessel’s owner Navios Tankers confirmed Wednesday.
State-owned Oman Oil Co expects to list 20%-25% of its shares in an IPO by the end of next year, Oman’s Oil Minister said on Wednesday. It would become the second national oil company in the Gulf to raise cash this way to help diversify the economy away from oil.
doe data
The draw in U.S. crude stocks was primarily caused by an increase in refinery runs of almost 2.5% from 89.3% to 91.6%.
The build in gasoline stocks seems to be out of sync with our material balance statement.
The build in distillate stocks seems to have been caused by a significant drop in demand even as exports increased substantially.
Naphtha
Asia’s naphtha crack extended losses on Wednesday, slipping further away from recent highs amid expectations of improved arbitrage supplies into Asia.
Refiners resuming production after the end of maintenance season around end-November is expected to help lift arbitrage supplies into Asia in January.
But ongoing current supply shortages in Asia following thin arbitrage supplies from the Middle East are expected to support the market over the near term.
The naphtha crack fell from $7.70 a barrel from the previous session to $102.80 a tonne on Wednesday.
The December crack is higher at – $ 1.70 / bbl.
Gasoline
No fresh news on the gasoline markets. Light distillate stocks in Fujairah fell by another quarter million barrels to 4.66 million tonnes, their lowest this year.
The December crack is higher at $ 8.40 /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 43 cents a barrel to Singapore quotes, compared with a premium of 34 cents a barrel on Tuesday.
Cash differentials for jet fuel stayed at a discount of 31 cents per barrel to Singapore quotes as the physical market for aviation fuel in the Singapore trading window remained muted with no bids or deals on Wednesday.
Winter in the northern hemisphere typically bolsters demand for kerosene, which belongs to the same grade of oil products as jet fuel, and is widely used for heating in some parts of northeast Asia, especially Japan. Temperatures in Tokyo are expected to stay below normal at least for the next one week, while temperatures in Seoul would remain mostly lower than normal for the next two weeks.
The jet fuel market has been weighed down by ample supplies over the last couple of months as the aviation sector took a hit from slowing economic activity and U.S.-China trade tensions took a toll on air freight demand.
The December crack for 500 ppm Gasoil is lower at $ 12.80 /bbl with the 10 ppm crack at $ 14.05 / bbl. The regrade is at $ 0.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month 0.5% very low-sulphur fuel oil (VLSFO) crack against Brent crude slipped from a more than two-month high in the previous session while the front-month time spread also narrowed its premium.
The December VLSFO crack slipped to $21.27 a barrel above Brent crude, down from a $21.45 a barrel in the previous session, its highest since Sept. 17.
The Jan/Feb VLSFO time spread slipped to $3.25 a tonne, down from a $4.50 a tonne premium in the previous session.
The December 180 cst crack is lower at -$ 24.45 / bbl with the visco spread at $ 1.30 /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.