Crude Oil
Oil prices fell almost 1% on Tuesday after traders recalibrated the impact of the US attacks. Brent crude futures settled at $68.27 a barrel, easing 64 cents. WTI crude settled at $62.70, falling 57 cents.
Prices also fell despite higher compliance among the OPEC on meeting production quota curbs aimed at reducing supply. OPEC members pumped 29.5 million bpd last month, down 50 kbpd from November’s revised figure.
This morning, crude prices have shot up 3% after Iran fired more than a dozen ballistic missiles from Iranian territory against at least two Iraqi military bases hosting US-led coalition personnel in the early hours of Wednesday. This was just a few hours after the funeral of Qassem Soleimani.
The Iraqi military joint operations command has received a letter from the US army concerning a possible withdrawal of its troops from the country, however, the English and Arabic language versions were not identical so Iraq had requested clarifications from Washington.
Iran has also said it will not make any attacking moves if the US doesn’t retaliate against this attack.
Iran’s nuclear deal with world powers has not been dissolved despite Tehran’s decision to abandon limits on enriching uranium required by the pact, state news agency IRNA quoted the Deputy Foreign Minister as saying on Tuesday.
api data
U.S. crude inventories fell by 5.9 million barrels in the week to Jan. 3 to 430 million barrels, data from the API showed on Tuesday. This seems to be catching up with DOE data of last week. The product builds reported were also extremely large.
Official government data is due to come out on Wednesday.
Naphtha
Asia’s naphtha crack recovered by $4.80 to reach a two session high of $75.73 a tonne on Tuesday as demand emerged with the first tender awarded this year in South Korea.
YNCC bought nine open specification naphtha cargoes for arrival at Yeosu in the second half of February at premiums of about $18 $19 a tonne to Japan quotes C&F. That was the lowest it has paid since Aug. 29 last year. The combined volume for the nine cargoes is about 225 KT.
YNCC will perform scheduled maintenance at one of its three crackers later this year.
The January crack has dropped to – $ 5.75 / bbl.
Gasoline
No fresh news on the gasoline markets today.
The January crack is higher at $ 4.65 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil were at 37 cents per barrel over Singapore quotes on Tuesday, a level not seen since Dec. 3.
The January/February spread for 10 ppm gasoil in Singapore widened by 1 cent to trade at a premium of 36 cents per barrel on Tuesday, indicating the market would likely strengthen in the coming weeks.
Cash premiums for jet fuel were at 9 cents per barrel to Singapore quotes on Tuesday, compared with a 2 cent premium a day earlier.
The January crack for 500 ppm Gasoil has firmed up to $ 12.70 /bbl with the 10 ppm crack at $ 13.50 / 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 for a second straight session on Tuesday to $28.77 per barrel above Brent crude. as compared to $29.08 per barrel a day earlier.
Meanwhile, Asia’s cash premium for 380 cst HSFO dipped 44 cents to $19.17 per tonne to Singapore quotes on Tuesday.
Cash premium for 180 cst HSFO climbed to $23 per tonne to Singapore quotes, backed by a firmer deal in the Singapore physical trade window. The premium stood at $14.25 per tonne a day earlier.
The HSFO market is currently getting some support from tight supplies in the region as suppliers have switched to low sulphur fuel grades to meet demand since IMO 2020 came into effect.
The January 180 cst crack has strengthened further to -$ 15.50 / bbl with the visco spread at $ 1.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The long dated middle distillate cracks have bounced back strongly. For now, we will watch 1Q21 Jet to hedge above $19 / 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.