Crude Oil
Oil prices inched up on Tuesday as OPEC’s deal with associated producers last week to deepen output cuts in 2020 continued to provide a floor for prices. Brent crude settled up 9 cents at $64.34 a barrel, and West Texas Intermediate oil rose 22 cents to $59.24 a barrel.
However, a Dec. 15 deadline for the next round of U.S. tariffs on Chinese imports weighed on markets. U.S. President Donald Trump does not want to implement the next round of tariffs, U.S. Agriculture Secretary Sonny Perdue said on Monday but he wants “movement” from China to avoid them. The Wall Street Journal reported that officials from both sides were laying the groundwork for a delay of a fresh round of tariffs. Also the growth rate of China’s imports of major commodities has accelerated in recent months, indicating Beijing’s stimulus efforts may be bearing fruit and that the impact of a trade war may not be as bad as feared.
On Tuesday, U.S. House Democrats agreed to support a separate U.S.-Mexico-Canada trade agreement after a year of negotiations, clearing the way for ratification by the Congress this year. The trade deal must also still be approved by the Canadian parliament.
Democrats in the US House of Representatives announced impeachment charges against the US President on Tuesday, making Donald Trump the fourth president in US history to face a formal effort to remove him from office.
The US is on track to become a net exporter of crude and fuel for the first time on record on an annual basis in 2020, the US EIA said on Tuesday. Net exports of crude oil and petroleum products are expected to average 570 KB/D in 2020, the EIA said.
India’s power demand fell 4.3% YoY in Nov’19, representing the fourth straight month of decline, government data showed, potentially reflecting a worsening industrial slowdown which has stifled overall economic growth.
api data
The data from from API was definitely bearish with product builds greater than expectations in addition to the surprise crude builds. Data from DOE will give further direction to the market.
Naphtha
Asia’s naphtha crack rose for a fourth straight session on Tuesday to reach its highest in nearly 1-1/2 weeks at $122.18 a tonne as persistent strong demand soaked up supplies.
Gasoline
Asia’s gasoline crack fell to $6.99 a barrel, its lowest since Nov. 5. Ample supplies from China and weaker demand recently for European gasoline from the United States have weighed on fundamentals.
Cash deals in the Singapore market were vibrant, however, with five cargoes changing hands
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian 10ppm gasoil crack extended losses to reach $14.06 a barrel on Tuesday, lowest since Nov. 26 due to weak demand for the fuel.
New refineries have sprung up this year in Malaysia, Brunei and China. Distillate stockpiles which include diesel and heating oil in the United States were seen up by 1.8 million barrels last week, a preliminary Reuters poll showed on Monday.
Outages and strikes in Europe did not provide any support to the gasoil fundamentals in Asia. Royal Dutch Shell has shut a unit at its 404,000 barrels per day Pernis oil refinery in the Netherlands after a crude spill a day earlier. France on the other hand was dealing with strikes as trade unions opposed President Emmanuel Macron’s pension reform. Dozens of schools had closed in Paris, while airlines had to cancel 20% of flights and refineries had to halt distribution.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) firmed on Tuesday in a further sign of rising demand and tightening supplies of the new marine fuel. The first-quarter 2020 price spread between 10ppm gasoil and VLSFO firmed to $35 per tonne while the first quarter VLSFO barge crack was at $16 a barrel.
With most suppliers now selling VLSFO bunkers, supplies are starting to shrink, narrowing the price spread between VLSFO and cleaner burning and more costly gasoil.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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.