Crude Oil
Oil fell about 2 percent on Thursday as the market was weighed down by concerns that global demand growth would lag in the coming year. Brent crude oil futures fell $ 1.06 to settle at $61.63 a barrel, while WTI crude futures dropped $1.37 to settle at $52.64 a barrel.
US President Trump said he would not be meeting Chinese President Xi Jinping before the deadline for the moratorium on tariffs set for March 1. He did not rule out the possibility of a meeting later.
In the meanwhile, a committee of the US House of Representatives approved a bill that would open up the OPEC to antitrust law suits. While it is not sure whether the bill would make its way to the full house, it will be useful as a stick to pressurise the OPEC to ensure that there is adequate supply to prevent prices from rising dramatically while achieving another objective of enforcing the sanctions on Iran.
On the other side of the Atlantic, the European Commission sharply cut on Thursday its forecasts for euro zone economic growth this year and next because it expects the bloc’s largest countries to be held back by global trade tensions and an array of domestic challenges. Further, German industrial output unexpectedly fell in December for the fourth consecutive month, sending another signal that growth in Europe’s biggest economy is weakening
Naphtha
Asia’s open specification naphtha fell to an almost one week low of $36.35 a tonne on Thursday following muted demand as the Lunar New Year drew some buyers away.
The February crack has dropped to -$ 7.60 /bbl.
Gasoline
Asia’s gasoline crack was at a discount of 97 cents a barrel to Brent crude, with the current value having strengthened against a discount of $1.27 a barrel on Monday before the market closed for the Lunar New Year holidays. Demand from India could have given the market some support, although not enough to turn the market around as oversupply persisted across regions of Singapore, the United States and Europe.
India’s HPCL has an outstanding tender seeking a total of 900 KT of gasoline for April to December arrival at Ennore, Vizag and Mundra. BPCL in India was also looking to import gasoline but for a 35,000 tonne cargo scheduled for March 1-12 arrival at Kochi through a tender closing on Feb. 12. India is moving towards Euro VI compliant fuel next year and refiners are expected to shut their refineries to prepare for the next wave of cleaner fuels.
Light Distillate stocks in Singapore once again rose close to record highs as inventories were reported at 16.04 million in the week to February 6th.
The February crack has dropped to -$ 1.00 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil were at 31 cents a barrel to Singapore quotes on Thursday, compared with a discount of 35 cents per barrel on Monday.
Jet cash discounts were at 30 cents a barrel to Singapore quotes on Thursday, compared with Monday’s discounts of 70 cents a barrel.
Cash differentials would have been buoyed by steady demand from the aviation sector and easing of the paper cracks.
Stocks for middle distillates in Singapore fell by 231 KB to 11.59 million barrels in the week to Feb. 6, data from Enterprise Singapore showed on Thursday. This is the third straight week of drawdowns.
The February crack has improved to $ 13.15 /bbl with the 10 ppm crack at $14.15 /bbl. The regrade has improved to $ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s fuel oil market was largely steady on Thursday as industry participants returned from mid-week holidays. Nevertheless, cash premiums for the mainstay 380 centistoke high sulphur fuel oil (HSFO) slipped to a one-month low on Thursday, but further losses were seen limited by expectations of tightening supplies of finished grade materials in the near term.
The 380 cst fuel oil cash premium declined to $3.15 a tonne to Singapore quotes, from $3.22 a tonne in the previous session. This was the lowest since Jan. 7.
Singapore fuel oil inventories slipped to a three-week low of 19.32 milion barrels in the week ended Feb. 6, weighed down by shrinking net imports of the fuel.
The February 180 cst crack has jumped further to $ 2.70 / bbl with the visco spread at $ 0.50 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Fuel Oil cracks are still spiking. We shall hedge 2Q19 at $ 1.50 /bbl and 3 Q19 at -$ 1.00 /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 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.