Crude Oil
Oil fell nearly 3 percent in choppy trading on Thursday after OPEC and its allies ended a meeting without announcing a decision to cut crude output. Brent crude oil fell $ 1.50 cents to settle at $60.06 / bbl. U.S. crude settled $ 1.40 lower at $51.49 a barrel.
The volatility in the markets continued with Brent moving in a range of $58.42-$61.97 and WTI between $ 50.11-$53.28 /bbl.
Saudi Energy Minister Khalid al-Falih said OPEC needed Russia to cooperate, and said a decision was likely by Friday evening. Russian Energy Minister Alexander Novak flew home from Vienna earlier for talks with President Vladimir Putin in Saint Petersburg. Novak returns to Austria’s capital on Friday for discussions.
The DOE reported a huge drop of over 7 million barrels in crude stocks lending some support to prices. While this was against market expectations of a build, we have been cautioning readers about something like this due to discrepancies with the Material Balance report. Indeed, even if we look at the changes for this week, the draw is less than what the material balance would suggest. The draw seems to have been caused by a huge drop in imports to tune of almost 1 million barrels per day combined with exports rising by over 750 kbpd to a record 3.2 million bpd.
For this week, the US has been a net exporter of Crude and Products combined for the first time since at least 1973.
While the growth in distillate demand has been healthy the fact that distillate products have built nevertheless has to be bearish for oil prices. Our material balance statement suggests a draw for stocks last week instead of the build reported.
Naphtha
No fresh news on Naphtha today.
The December crack has improved to -$ 4.25 /bbl
Gasoline
The benchmark Singapore 92 RON gasoline crack against Brent crude edged 52 cents a barrel higher to a discount of $1.03 a barrel on Thursday.
This came as Singapore inventories of light distillates snapped three weeks of inventory builds to drop to 13.875 million barrels in the week to Dec. 5. However, this week’s inventories 8 percent lower than a year earlier.
The December crack has junped to $ 1.85 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
The Asian gasoil cash differentials continued their downward spiral on Thursday due to ample supply of the industrial fuel in the region. Several tankers carrying gasoil are floating offshore Taiwan.
Singapore’s onshore gasoil and jet fuel stocks slipped 1.4 percent to a three-week low of 10.616 million barrels in the week to Dec. 5.
There was a diesel shipment from Australia to Singapore totalling about 20,000 tonnes which was unusual as Australia is an importer of the fuel and not an exporter.
The December crack has improved to $ 12.95 /bbl with the 10 ppm crack at $ 13.70 /bbl. The regrade is lower at $ 2.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums and time spreads of Asia’s 380-cst fuel oil slipped on Thursday despite sustained physical trade activity in the Singapore window.
The 380-cst fuel oil cash premium slipped to $5.65 a tonne to Singapore quotes, down from $5.95 a tonne in the previous session . Intense buying interest on Monday had boosted the premium to a two-week high of $8.97 a tonne to Singapore quotes.
Similarly, the 380-cst Dec/Jan time spread slipped to $10 per tonne on Thursday, down from $10.75 a tonne in the previous session.
This came as Singapore fuel oil inventories climbed for a third straight week to a near six-month high of 19.84 million barrels in the week ended Dec. 5.
The December 180 cst crack has tanked to +$ 1.80 / bbl with the visco spread at $ 0.55 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Fuel Oil cracks have seriously dropped in the prompt. Should they return to negative territory, our hedges will return to being in the money once again. The regrade remains well supported for now.
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.