Brent crude oil futures rose more than 1% on Friday as expectations of a U.S. economic stimulus package and the possibility of a vaccine for the coronavirus overrode rising supply and increased COVID-19 deaths.
Brent crude rose 54 cents to $49.25 per barrel. WTI futures rose 62 cents to settle at $46.26 a barrel.
During the session, the Brent contract hit its highest since early March at $49.92. WTI touched a high of $46.68 a barrel. Both benchmarks gained for a fifth consecutive week, with Brent up 1.7% and U.S. crude up 1.9%.
The backwardation in Brent crude futures is at its highest since February.
U.S. production, meanwhile, has recovered from the two-and-a-half-year lows touched in May mainly because shale producers have brought wells back online in response to rising prices.
Saudi Aramco raised all pricing of its crude exports for Jan’21 to Asia after OPEC and allies agreed to a gradual increase in production starting next month.
US energy firms added 5 oil rigs in the week to 4 Dec’20 to total 246 (-417 YoY), the highest since May’20. The number of operating rigs has surged since Aug’20, when it hit a record low, according to Baker Hughes data going back to 1940.
Money managers raised their net long U.S. crude futures and options positions in the week to Dec. 1, the U.S. CFTC said.
At a global level, the death toll from the COVID-19 virus rose to 1,541,373 (+7,537 DoD) yesterday. The total number of active cases rose by around 430,000 over the weekend to 19.07 million. (Click here for details).
Asia’s naphtha crack rose 6% to $48.05 a tonne on Friday as demand strengthened, but it was still 32% lower compared with a month earlier.
The January crack has dropped to – $0.35 /bbl.
Asia’s gasoline crack rebounded from a four-month low to reach a three-session high of $1.49 a barrel.
Gasoline stocks in ARA refining and storage hub edged down 2% in the week to Thursday to a three-week low of 1.28 million tonnes, as exports to the United States and West Africa improved.
The January crack is lower at $2.70 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for gasoil with 10 ppm sulphur content narrowed for a second straight session to 15 cents a barrel over Singapore quotes on Friday, compared with a discount of 20 cents per barrel a day earlier.
The prompt-month spread for 10 ppm gasoil in Singapore traded at a discount of 3 cents per barrel on Friday, compared with minus 20 cents per barrel on Thursday.
Gasoil stocks in ARA dropped 2% to 2.4 million tonnes in the week to Dec. 3. ARA jet fuel inventories fell 14.3% to 890 KT. Compared with a year earlier, ARA gasoil inventories were up 4%, while jet fuel stocks were 25.2% higher.
The January crack for 500 ppm Gasoil is lower at $4.95 /bbl with the 10 ppm crack at $ 5.55 / bbl. The regrade is at -$ 0.75 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash premiums and time spreads for both grades of Asia’s HSFO plummeted on Friday, with both the 180-cst and 380-cst HSFO prompt-month time spreads flipping to contango, as sellers dropped prices to help spur demand.
Prompt-month time spreads for the 180-cst HSFO and 380-cst HSFO fell to multi-month lows of minus $1.50 per tonne and minus $1 per tonne, respectively.
180-cst HSFO cash differentials fell to minus 25 cents a tonne to Singapore quotes, down from a $1.46 per tonne premium on Thursday, while 380-cst HSFO premiums fell to 95 cents a tonne, down from $4.40 a tonne in the previous session.
In contrast, the 0.5% VLSFO market held largely steady with a supportive demand and supply outlook.
Fuel oil stocks in ARA dropped 11% from the previous week to a two-week low of 1.304 million tonnes in the week ended Dec. 3. Compared with last year, however, the inventories at the ARA hub were 39% higher and above the five-year seasonal average of 1.045 million tonnes.
The January crack for 180 cst FO is lower at -$1.85 /bbl with the visco spread at $0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No fresh activity 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.
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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.