Crude oil stayed in a small range yesterday with the Brent contract settling at $46.04 a drop of 11 cents and WTI settling at $ 44.98 / bbl a rise of 9 cents.
It stayed balanced inspite of another huge build in crude stocks (4.4 million barrels) reported by API in anticipation of a Clinton victory. As these hopes faded it is currently trading about $1 /bbl lower. In more bearish news, China’s imports for the previous month fell to a 10 month low of 6.78 million bpd. Further, the EIA said it expects US production of crude to fall in 2016 and 2017 by less than previously expected.
We expect a base for crude oil prices to form about here since product inventories too have dipped significantly. Rising cracks and profitability margins should spur crude consumption and therefore crude prices.
There appeared to be greater availability of Naphtha supplies yesterday resulting in an easing of the Naphtha margin. With refineries coming out of turnaround, Naphtha is expected to ease further going forward.
The Naphtha crack appears to be unchanged at a value of $ 1.4 / barrel for December
Gasoline supplies seemed tight in the US notwithstanding the reopening of the colonial pipeline. Given the drop in stocks as well (-3.6 Million Barrels), we expect the crack to stay strong for a while. Currently, the gasoline crack is trading around a value of $ 11.30 / bbl for December, marginally higher than yesterday’s level
Gasoil prices eased considerably today with the December crack being currently valued at $ 12.50 / bbl a drop of about $ 1 /bbl. The market structure still remains backwardated though.
API reported a drop in distillate stocks of 4.3 million barrels
The regrade continues to strengthen because of the difference in price structures. The value for the January regrade is $ 1.10 / bbl.
We are running out of adjectives for the strength in the Fuel Oil Crack. The November fuel oil crack continues to show a value of close to parity with Dubai in November. The December crack is valued at around -$ 1.0 /bbl.
We would recommend hedging this crack at these levels for December.
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.