Crude Oil
Oil prices edged higher on Monday, rebounding further from 1-1/2-year lows reached in December, on support from OPEC production cuts and steadying equities markets. Brent crude futures rose 27 cents to settle at $57.33 a barrel. WTI crude futures rose 56 cents to settle at $48.52 a barrel.
Prices drew support from a Wall Street Journal report saying that Saudi Arabia is planning to cut crude exports to around 7.1 million barrels per day (bpd) by the end of January. More upbeat equity markets also offered support. Shares have risen on expectations that trade talks this week between the United States and China will ease the trade war.
Naphtha
Asia’s naphtha crack’s performance was lacklustre. It fell $2.30 to $40.45 a tonne, the lowest since Dec. 11, as heavy supplies countered demand.
Following a week of muted demand, at least three buyers came forward on Monday to buy cargoes for second-half February delivery. This included south Korea’s GS Caltex and Japan’s Idemitsu Kosan.
The January crack is lower at -$ 4.55 /bbl
Gasoline
Asia’s gasoline crack fell to a two-session low of $1.46 a barrel after hitting a nine-week high in the previous session as higher supplies and stronger crude oil weighed on the market. Although traders were expecting China to export lower volumes of gasoline in January versus December, there were concerns that onshore tanks in Singapore were mostly filled to the brim.
The January crack has eased to $ 2.30 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil narrowed to 34 cents a barrel to Singapore quotes, compared with a discount of 46 cents a barrel on Friday.
Jet fuel cash differentials in Asia narrowed by a cent on Monday, lingering close to their lowest levels in more than three years as the market remained well supplied. Cash discounts for jet fuel were at $1.34 a barrel to Singapore quotes on Monday compared with a discount of $1.35 a barrel on Friday, the widest since August 2015.
This year, winter has not yet seen any prolonged cold spells with temperatures mostly staying above average in the region, keeping a lid on kerosene demand. Temperatures in Tokyo, Beijing and Shanghai were expected to remain mostly warmer-than-usual until the end of this week, according to weather forecast data. The persistent lack of demand for winter kerosene is the major factor hurting jet fuel prices, and a relatively stronger regrade -the price spread between jet and gasoil -was encouraging refiners to keep producing extra barrels of the aviation fuel.
The January crack has jumped to $ 13.65 /bbl with the 10 ppm crack at $ 14.60 /bbl. The regrade is lower at $ 1.45 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst barge fuel oil crack shrank its discount to Brent crude to the narrowest in a more than a month on Monday.
The February crack firmed to about minus $6.35 a barrel to Brent crude on Monday from minus $6.50 a barrel in the previous session. The front-month fuel oil crack was last narrower on Dec. 5 at minus $5.84 per tonne..
The January 180 cst crack has jumped to $ 0.55 / bbl with the visco spread at $ 0.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Fuel Oil cracks are still strengthening. We are adding one hedge on Feb-19 crack at +$ 0.10 / bbl 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 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.