Oil prices fell around 1% on Monday as surging coronavirus cases and heightened tensions between the United States and China undermined the positive impact from an OPEC+ deal on production.
Brent crude fell 46 cents to $48.79 per barrel. WTI futures fell 50 cents to settle at $45.76 a barrel.
Prices came under pressure after Reuters reported that the United States was preparing to impose sanctions on at least a dozen Chinese officials over their alleged role in Beijing’s disqualification of elected opposition legislators in Hong Kong.
China has helped support crude prices this year. In the first 11 months of the year, China imported a total of 503.92 million tonnes, or 10.98 million bpd, up 9.5% from a year earlier. The country’s November oil imports rose from the prior month.
Funds purchased the equivalent of 44 MB in the week to 1 Dec’20 raising the net position held to 661 MB, the highest levels since Jul-Aug’20, a sign of increasing confidence coronavirus vaccines will drive a recovery in oil consumption next year..
At a global level, the death toll from the COVID-19 virus rose to 1,549,807 (+8,105 DoD) yesterday. The total number of active cases rose by around 310,000 DoD to 19.38 million. (Click here for details).
Asia’s naphtha crack rose nearly 5% from the previous session to reach $50.40 a tonne on Monday, supported by weaker crude oil prices.
Total naphtha flows to Asia for December are seen at 5.5 to 6 million tonnes versus the previous month’s forecast of about 6 million tonnes.
The January crack has jumped to + $0.05 /bbl.
No fresh news on the Asia gasoline markets.
During the week of the Thanksgiving holiday on 26 Nov’20, gasoline sales fell 8.4% YoY, or about 185 million gallons, from the previous week, bringing demand for the fuel to its lowest level for the holiday week since 1997, OPIS said.
The January crack is lower at $2.65 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differential for jet fuel flipped to a narrow premium on Monday for the first time in more than nine months, while prompt-month spread for the aviation fuel remained in a contango structure.
Cash differentials for jet fuel were at a premium of 3 cents a barrel to Singapore quotes on Monday, a level not seen since late February. They were at a discount of 15 cents per barrel on Friday.
The December/January time spread for jet fuel in Singapore traded at a discount of 28 cents per barrel on Monday. The prompt-month spread has narrowed about 53% over the last two months.
Global air cargo demand in Oct’20 was down 6.2% YoY, but 4.1% higher MoM, amid a varying macroeconomic picture and as reduced air passenger demand continued to keep aircraft grounded, the IATA said in a statement on 7 Dec’20.
The January crack for 500 ppm Gasoil is higher at $5.40 /bbl with the 10 ppm crack at $ 6.00 / bbl. The regrade is at -$ 0.60 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front-month high-low (HiLo) sulphur price spread, the difference between front-month 0.5% VLSFO and 380-cst HSFO swaps, eased on Monday, slipping away from an over four-month high in the previous session.
The HiLo spread has firmed in recent weeks after bullish sentiment for HSFO demand was hammered amid a weaker consumption outlook from utilities. The front-month HiLo spread fell to $79.50 a tonne on Monday, down from $81.50 a tonne on Friday, the highest since July 23.
The January crack for 180 cst FO is higher at -$1.65 /bbl with the visco spread at $0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
We will hedge the January, Jap-Naphtha – Dubai crack at current levels of $0.05 / bbl.
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.
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.