Crude Oil
US Oil prices took another beating as surging US crude stocks and production has made OPEC rethink on production. Brent crude futures settled 6 cents lower at $72.07 a barrel. WTI crude futures fell 54 cents to settle at $61.67 a barrel.
While oil prices slipped post the EIA’s weekly data report, they recovered considerably on reports that OPEC may cut crude output in 2019.
The DOE reported another big build in crude stocks of 5.8 million barrels. Stocks in Cushing also built 2.4 million barrels. The major surprise though was the jump in US production, up 400 kb / d to 11.6 million barrels.
In what is bearish news Distillates continuing to draw more than(in our opinion) for crude pries, Product demand for both gasoline and gasoil dropped by over 100 kb/d. While this would have suggested a product build in distillate stocks as well, the draw is a bit surprising.
Naphtha
Asia’s naphtha crack fell for a fourth straight session on Wednesday and hit a fresh 25-month low of $37.10 a tonne, weighed down by mounting supplies. The return of crackers from scheduled maintenance in South Korea failed to combat the weak fundamentals.
Western cargoes arriving this month are expected to hit at least 1.6 million tonnes. Middle Eastern cargoes to Asia were similarly at high levels of 2.9 to 3 million tonnes, compared with a monthly average for year-to-date at up to 2.8 million tonnes.
The November crack has dropped to – $ 8.40 / bbl
Gasoline
Gasoline market was battered by ample stocks with the crack value diving by 38 percent from the start of the week to 88 cents a barrel on Wednesday. This was the lowest gasoline crack value seen in Asia since September 2013.
Asia continued to grapple with its inventory levels. Japan’s gasoline inventories rose 440,000 barrels to 10.82 million barrels in the week to Nov. 3. Fujairah stocks also shot up 1.6 million barrels to 10.8 million barrels, a record high.
The November crack has dropped to $ 0.90 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10ppm sulphur content fell to 53 cents a barrel to Singapore quotes on Wednesday amid weaker buying interests. The premiums were at 59 cents a barrel on Monday.
Jet cash discounts widened to 37 cents a barrel to Singapore quotes on Wednesday, compared with a discount of 25 cents on Monday. The jet fuel physical market in the Singapore window remained muted with no bids or deals on Wednesday.
Jet cash discounts widened to 25 cents a barrel to Singapore quotes on Monday, compared with a discount of 12 cents on Friday.
Distillate stocks in Fujairah dropped by 337 kb to 4.06 million barrels.
The November crack has jumped further up to $ 18.00 /bbl with the 10 ppm crack at $ 18.90 /bbl. The regrade is steady at $ 0.70 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 380-cst high-sulphur fuel oil barge crack firmed on Wednesday, bringing its discount to Brent crude to the narrowest in more than 15 months amid weaker crude prices and a persistent shortage of fuel oil supplies.
The December 380-cst fuel oil crack to Brent crude was trading at about minus $5.80 a barrel on Wednesday, compared with a discount of $6.15 a barrel on Tuesday.
Fuel oil inventories at Fujairah fell 362 KB to a six-week low of 6.67 in the week ended Nov. 5. Fujairah fuel oil inventories are now 23 percent lower from the same time last year. In 2018, Fujairah’s fuel oil stocks averaged 8.144 million barrels compared with 9.974 million barrels in the year before.
The November 180 cst crack is higher at +$ 4.50 / bbl with the visco spread at $ 0.80 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Gasoil cracks have one again jumped meteorically in the prompt. We shall add tranches of Jet and 10ppm Gasoil cracks for Dec -18 at $ 19.55/bbl and $18.95 /bbl respectively.
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.