Crude Oil
Oil prices slipped from multi-month highs to end more than 1% lower on the first trading day of the year after OPEC+ failed to decide on Monday whether to increase output in February.
Brent futures settled 71 cents lower at $51.09 a barrel, while WTI futures fell 90 cents to settle at $47.62.
Earlier in the session, WTI hit its highest since February and Brent its highest since March. The premium of Brent over WTI reached its highest since May.
The OPEC group agreed to meet again on Tuesday to discuss the issue of production levels further. Saudi Arabia argued against pumping more due to new coronavirus lockdowns while Russia led calls for higher production citing recovering demand.
Money managers cut their net long US crude futures and options positions by 1,156 contracts to total 324,632 in the week to December 29 Dec’20, the US CFTC said on Monday.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 1,859,843 (+9,027 DoD) yesterday. The total number of active cases dropped by around 90,000 DoD to 23.19 million. This is the first drop in active cases in several months. (Click here for details).
Naphtha
Asia’s naphtha crack strengthened further for a seventh consecutive session on Monday, hitting its highest in more than a year, supported by robust petrochemical and blending demand.
The naphtha crack, which has surged by more than 110% since the beginning of December, rose to $102.85 per tonne on Monday, its strongest since December 2019. The crack was $102.33 per tonne on Thursday.
The January crack is higher at $2.25 /bbl.
Gasoline
Asia’s gasoline crack, however, slid to $3.48 on Monday, from $3.56 per barrel on Thursday.
The January crack is lower at $4.05 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10 ppm sulphur content were at a discount of 19 cents a barrel to Singapore quotes, the widest discounts since Dec. 7. They were at a discount of 11 cents per barrel on Thursday, the last trading day of 2020.
The Jan/Feb time spread for 10 ppm gasoil in Singapore deepened its contango on Monday to trade at a discount of 9 cents per barrel.
The cracks for the benchmark gasoil grade in Singapore, which averaged $6.78 per barrel over Dubai crude in 2020, are currently 57% lower than their seasonal five-year average for this time of the year. Northwest European diesel barge refining margins have also ended 2020 at around $6 a barrel, the lowest in over ten years.
The gasoil EFS traded at minus $7.88 per tonne on Monday.
The January crack for 500 ppm Gasoil is lower at $4.40 /bbl with the 10 ppm crack at $ 5.25 / bbl. The regrade is at -$ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO market extended gains on Monday, with cash premiums and front-month crack values climbing to multi-month highs.
VLSFO cash premiums jumped to $2.46 a tonne amid firmer buying interest in the Singapore window, up from $1.44 a tonne in the previous session and its highest since late February. The February VLSFO crack against Dubai crude also rose to $11.75 a barrel, its highest since mid-March.
The January crack for 180 cst FO is higher at -$2.65 /bbl with the visco spread at $0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action for 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 refinery.
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.