Crude Oil
Oil fell nearly 3 percent on Monday, echoing the weakness in global stock markets as the focus returned to concerns about growth in demand and crude prices erased some of the gains made last week on an OPEC-led decision to cut output.. Brent crude oil fell $ 1.70 cents to settle at $59.97 / bbl. U.S. crude fell $ 1.61 to settle at $51.00 a barrel.
Concerns about growth came to the forefront on new signs the U.S.-China trade war was impacting world economic growth. The market was also weighed down by confusion stemming from British Prime Minister Theresa May’s postponement of a parliamentary vote on her Brexit deal and sluggish data from the world’s largest economies including the U.S., China, Japan and Germany in recent days.
Hedge funds and other money managers cut their bullish wagers on crude to the lowest in more than two years in the week ending Dec. 4. The speculator group cut its combined futures and options position in New York and London by 25,619 contracts to 144,775 during the period. The level is the lowest since Sept. 20, 2016.
In the meanwhile, Libya’s NOC on Monday declared force majeure on exports from the 315kbpd El Sharara oilfield, which also resulted in an additional loss of 73kbpd at the El Feel oil field.
Naphtha
Asia’s naphtha crack climbed for a third straight session on Monday, rising to a four-session high of $39.95 a tonne. However, concerns of excess supplies and lacklustre demand are also weighing on the naphtha market, keeping a lid on upside potential.
The December crack is lower at -$ 4.20 /bbl
Gasoline
The Singapore 92 RON gasoline crack against Brent crude slipped to a two-session low of minus $0.87 a barrel, down from a premium of $0.05 a barrel on Friday. Few signs of an easing supply glut over the near term and higher crude oil prices on Friday weighed on sentiment.
The December crack is lower at $ 1.25 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10ppm gasoil were at a discount of 60 cents a barrel to Singapore quotes on Monday. They were at a discount of 65 cents a barrel on Friday, their weakest on record since the benchmark gasoil was shifted to 10ppm gasoil in January this year. Lack of strong seasonal demand for the industrial and transportation fuel kept the cash market at wide discounts.
Gasoil cash differentials are also taking a beating as the prompt-month spread remains in contango. The contango appears to be sufficient to make storage of gasoil on water economic. Seven to nine long-range tankers carrying about 5 to 7 million barrels of diesel fuel are floating off Taiwan and Southeast Asian waters as a steep fall in oil prices meant buyers pulled back hoping for more declines.
Cash discounts for jet fuel were at $1.06 a barrel to Singapore quotes on Monday, as against a discount of $1.10 a barrel on Friday.
The steep discount in middle distillate prices indicates that paper trading has kept the flat price at elevated levels and, unless this eases off, we do not see discounts dropping.
The December crack has improved to $ 13.30 /bbl with the 10 ppm crack at $ 14.05 /bbl. The regrade is steady at $ 2.10 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s prompt-month time-spread for 380-cst fuel oil extended their declines on Monday, weighed down by a steady growth in Singapore fuel oil inventories over recent weeks and pressure of firm selling ahead of the holiday season this month.
The Dec/Jan 380-cst time-spread slipped to about $7.75 a tonne on Monday from about $8.25 a tonne on Friday. Looking further ahead, however, the fuel oil market structure was firmer on Monday as expectations of tightening supplies following OPEC’s announcement to curb production and amid mounting pressures on Iranian oil exports provided support. The later-dated Jan/Feb 380-cst time-spread climbed to $5 per tonne on Monday from $4.25 on Friday.
The January 380-cst barge crack narrowed its discount to Brent crude by about 25 cents from Friday to minus $6.55 a barrel on Monday despite higher crude prices.
Meanwhile, cash premiums of 380-cst fuel oil edged slightly higher on Monday, but limited buying interest for physical cargoes kept the fuel premiums near Friday’s 2-1/2-month low.
The December 180 cst crack has improved to +$ 1.55 / bbl with the visco spread at $ 0.55 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh news 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.