Oil markets continued their correction yesterday in the face of ostensibly bullish DOE crude data which showed a draw of 2.4 million barrels against an expectation of around 1.0 million barrels. WTI fell below $50 /bbl to settle at $ 49.77 /bbl, while Brent gave up $0.93 /bbl to settle at $53.00 / bbl.
The possible reasons the markets did not get excited by this draw could be
- The market was somewhat expecting it after the API data.
- While there was an overall draw, Cushing reported a huge build (in excess of 3.5 million barrels)
- Products, worryingly continue to build
Going forward, there are more reasons to be less worried about any impact of the said cut. In the first place, Nigeria expects its production for January to be of the order of 2.1 million barrels / day as compared to 1.6 million barrels / day. This kind of negates half the cut. Libya, another country affected by the also increased production. OPEC has also said they will not insist that all its members actively cut. Russia does not seem to be showing any positive will to cut by 300 Kb/d as it had said it would.
The physical Naphtha crack recovered marginally today, but the forward outlook still remains weak.
The January cracks is currently showing a value of -$1.2 /bbl
The gasoline market saw Hin Leong emerge as a buyer today buying 5 out of the six cargos sold in the window. However the January crack still moves around $11.0 / bbl.
The gasoil crack recovered a little today inspite of growing stockpiles around the world. The rise could be the impact of Hin Leong and Winson Oil not being there to sell.
The crack is showing a value of $11.25 /bbl for January.
The regrade appears to be easing further as the value for January wast a level of $ 1.5 /bbl.
Fuel Oil saw the emergence of sellers today who appeared to be keen to take profit not only on premiums, which slipped today, but also on the high crude oil prices.
The January crack is still valued at -$1.50 today. February is valued at -$ 2.3 /bbl. We would considering selling a little of the February crack at these levels given the uncertain markets.
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.