A story of “All is quiet on the western front”
Crude stayed balanced yesterday 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 dropped to about $1 /bbl lower. As the markets began to cheer a Trump win crude oil too rose to settle at $46.36/bbl (Brent) and $ 45.27 /bbl (WTI) a rise of 32 cents and 29 cents respectively.
The DOE data was more or less was in line with API data with a reported build of 2.5 million barrels, but the markets shrugged that off as well. As we mentioned yesterday, we expect a base for crude oil prices to form about here since product inventories too have dipped significantly.
The Naphtha market again strengthend on the back of renewed demand for the product. More ethylene crackers are coming onilne with the demand as also the Shell cracker which was in turnaround since September.
The Naphtha crack appreciated to show a value of $ 1.8 / barrel for December
Gasoline demand continues to remain firm. However the crack has not changed much showing a value of $ 11.2 /bbl for December. Our outlook for gasoline is ambivalent for the following reasons.
- Stocks are building in Asia
- While stocks are declining in the US, they continue to remain well above the 5 year maximum for gasoline stocks.
- A mild winter in the US could spark off another driving season.
- Chinese Export is always a mystery
Gasoil prices were steady 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.
One trader, Winson Oil has been buying a lot of gasoil in the last couple of months reportedly over 10 Million Barrels. The destination for this product is expected to be North Asia to fulfil demand for bunkers, or shipping fuel. It also has entered into a term contracts to lift 4 million barrels of gasoil per month out of Taiwan and Korea according to a trader.
Jet appears to be coming into its own with the regrade nearly flat for the balance of this month. The value for the January regrade is around $ 1.20 / bbl.
Consummers of fuel oil got to heave a sigh of relief as there appeared to be an easing in the availability of supplies finally. The value of the December crack droped nearly half a dollar to around -$ 1.5 /bbl. While this is still extraordinarily strong, this could be a mark of reversal.
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.