Oil markets started correcting today for the first time since OPEC made its bullish announcement of limiting production to 32.5 Mbpd.
WTI settled 86 cents down at $ 50.93 /bbl, while Brent gave up $1.01 /bbl to settle at $53.93 / bbl.
There were a combination of reasons for this correction. First of all, a technical correction was overdue. Secondly OPEC reported a production of 34.19 million barrels for November i.e. 1.69 Mbpd over the agreed level. Libya and Nigeria, both exempted from the supply cut have increased production. Further, Russia has reported a production of 11.2 Mbpd, its highest level in 30 years. They will be using this as a base to cut 300 Kbpd if they adhere to their agreement.
API reported a draw of 2.2 Million barrels, which is ostensibly supportive. However, Cushing has reported a build of 4.4 Million barrels which means that the draw is from less consequential areas.
Products continued to build which is another dismaying nail in the coffin of crude bulls.
Naphtha sank still further today.
The December and January cracks are currently showing a value of -$1.2 /bbl
There has been no change in the situation in gasoline which continues to hold firm for the moment with the January crack still around $11.0 / bbl.
The gasoil crack continues to stay steady at around $11.0 /bbl for January.
The regrade appears to be slipping though with the value for January showing a level of $ 1.65 /bbl. We would recommend being cautious sellers for January and February. March though we would recommend selling at a current value of $ 1.45 /bbl.
The Fuel Oil crack has jumped with traders seriously beginning to worry about the availability of on specs stocks. The January crack is valued at -$1.50 today, an improvement of close to 95 cents/ bbl
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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.