Oil prices rose more than 2 percent on Tuesday, supported by hopes that crude demand may rise more quickly if talks between U.S. and Chinese officials resolve the trade dispute between the world’s two biggest economies. Brent crude futures rose $1.39 cents to settle at $58.72 a barrel. WTI crude futures rose $1.26 cents to settle at $49.78 a barrel.
In our opinion, the continuous rise of prices over the past several days is probably more of an exiting of shorts than initiation of fresh longs.
The trade talks do appear to be progressing well. A U.S. delegation member said trade talks between U.S. and China will continue on for an unscheduled third day on Wednesday on issues including purchases of U.S. farm and energy commodities and increased access to China’s markets.
In other news, India has begun paying Iran for oil in rupees, a senior bank official said on Tuesday, the first such payments since the United States imposed new sanctions against Tehran in November.
While the data showed a substantially larger than expected crude build, it also showed a huge rise in products. This rise could be a combination of high runs coupled with drop in demand at the start of the year.
Asia’s naphtha crack extended losses for the second day to reach a one-month low of $37.85 a tonne, weighed down by persistently weak gasoline fundamentals.
Petrochemical buyers continued to emerge to seek naphtha as a feedstock. Cash prices have flipped into a small premium indicative of an induced suppression of prices.
The January crack has sunk to -$ 5.10 /bbl
Asia’s gasoline crack on Tuesday was down by half from Monday to 73 cents a barrel. Weakness for gasoline is likely to continue for a while considering the consistent building of stocks even in the face of record high stock levels.
The January crack has dropped to $ 1.70 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for 10ppm gasoil widened their discounts to 36 cents a barrel to Singapore quotes, compared with a discount of 34 cents a barrel on Monday.
Cash discounts for jet fuel cargoes in Asian trading hub Singapore were at $1.33 a barrel to Singapore quotes on Tuesday, only two cents less than Friday’s discount of $1.35 a barrel, which was the widest since August 2015.
The January crack has increased to $ 13.75 /bbl with the 10 ppm crack at $ 14.75 /bbl. The regrade is steady at $ 1.45 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Front-month 380-cst barge fuel oil crack extended gains on Tuesday, narrowing its discount to Brent crude to the least in a more than a month on Monday, despite rising crude oil prices.
The front-month crack firmed to about minus $6.25 a barrel to Brent crude from minus $6.39 a barrel in the previous session, its narrowest discount since Dec. 5.
380-cst high-sulphur fuel oil cash premiums also firmed, rising to a two-session high of $3.39 a tonne to Singapore quotes, up from $2.97 a tonne on Monday..
The January 180 cst crack has eased to $ 0.30 / bbl with the visco spread at $ 0.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The 10 ppm Gasoil crack for Cal20 has crossed $ 19.00 /bbl. Accordingly, we are adding a hedge for the Cal 20 Gasoil crack at 19.10 /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.