Crude Oil
Oil prices steadied on Monday after Brent touched above $70 a barrel on rhetoric from the United States, Iran and Iraq that fanned tensions in the Middle East. Brent crude futures settled at $68.91 a barrel, gaining up 31 cents. WTI crude settled at $63.05, rising 22 cents.
Brent spiked to a a high of $70.74 a barrel from Friday’s settlement on the back of a lot of rhetric from the US, Iran and Iraq. Prices pared gains during the session on growing doubts that Iran would strike back in a way that would disrupt oil supplies.
Naphtha
Asia’s naphtha crack dived 12.3%, or nearly $10, on Monday to a two-month low of $70.93 a tonne amid production cuts by petrochemical producers.
Faced with persistently high naphtha premiums but weak demand for plastics, naphtha crackers from North Asia to Southeast Asia have reduced throughput by about 5% to 10%.
Spot deals were mostly muted due to the cuts, but naphtha spot prices may not fall as quickly as buyers are hoping. High oil prices, coupled with refinery maintenance in the Middle East, are likely to prevent a drastic drop in naphtha spot premiums in the short term.
The January crack has strengthened to – $ 4.70 / bbl.
Gasoline
No fresh news on the gasoline markets today.
The January crack is higher at $ 5.60 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil on Monday fell to 37 cents per barrel over Singapore quotes from 62 cents on Friday, hurt by weaker deal values in the physical market.
Cash premiums for jet fuel dropped to 2 cents per barrel to Singapore quotes on Monday, down from 33 cents a barrel on Friday.
The January crack for 500 ppm Gasoil has crashed further to $ 12.45 /bbl with the 10 ppm crack at $ 13.25 / bbl. The regrade is at -$ 0.20 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month crack for 0.5% VLSFO dipped on Monday but remained within sight of a record high touched in the previous session. The front-month VLSFO crack was at $29.08 per barrel above Brent crude during Asian trading hours on Monday, down slightly from a record $29.35 per barrel hit on Friday.
The January/February timespread stayed in backwardation to trade at a premium of $14.50 per tonne on Monday.
The 380-cst barge crack to Brent crude for February narrowed its discount to minus $26 per barrel on Monday, from minus $26.89 on Friday. The physical HSFO market in the Singapore trading window remained muted with no offers or deals on Monday.
The January 180 cst crack is much higher at -$ 16.95 / bbl with the visco spread at $ 0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The sharp collapse in middle distillate cracks has resulted in all our crack positions squaring off. However the Cal 21 10 ppm regrade looks a bit high at $0.65 /bbl and we shall institute this position for now. We are moving to the 10 ppm regrade in order to work with more liquid products going into the future.
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.