Oil prices settled slightly higher on Thursday, as the market grappled with a stronger U.S. dollar along with concern over increasing U.S. inflation, and after OPEC cut its 2021 oil demand forecast due to high prices.
Brent crude futures settled up 23 cents at $82.87 a barrel after falling during the session to $81.66.
WTI crude futures were up 25 cents to $81.59, bouncing off the session low of $80.20.
The energy complex traded higher toward the end of the session on confidence that post-pandemic demand would strengthen further in the coming months.
Oil bulls anticipating supportive words from the world’s biggest producers got a dose of reality instead as OPEC cautioned on Thursday that high prices could hurt demand for the crude it pumps. “A slowdown in the pace of recovery in the fourth quarter of 2021 is now assumed due to elevated energy prices,” the group said in its monthly report.
The Saudi-led OPEC also cited slower-than-expected demand growth in China and India — the second and third largest oil importers, respectively — for the downward revision. Overall, it trimmed its forecast for the year’s demand growth by 160,000 bpd to 5.65 million bpd.
Saudi Aramco, the world’s top exporter of crude oil, has notified at least six Asian customers it will supply full term volumes in December, people with knowledge of the matter said on Thursday.
At a global level, the death toll from the COVID-19 virus rose to 5.09 Million (+6,575 DoD) yesterday. The total number of active cases rose by 250,000 DoD to 18.98 million. (Click here for details).
Asia’s naphtha crack eased on Thursday but stayed near recent highs as petrochemical feedstock demand from crackers remained strong.
The crack slipped to $167.63 a tonne, from $172.95 in the last session. Naphtha refining margins have surged more than 45% since September.
“Demand for high paraffinic naphtha in Asia has remained strong, which has helped sellers of spot naphtha cargo to demand high premiums,” Mohammed Yasser, an analyst at Refinitv Oil Research, said in a note.
The December crack is higher at $ 4.85 /bbl.
Asia’s gasoline crack crack eased to $12.09 a barrel, from $12.19 in the last session.
The gasoline crack inched lower after a group of countries and carmakers committed to phasing out fossil-fuel vehicles by 2040 at climate talks. But the downside was capped by a decline in Singapore stocks of light distillates to a two-year low.
Singapore’s light distillates stockpiles declined by 515,000 barrels to 9.853 million barrels, Enterprise Singapore data showed.
The December crack is lower at $10.60 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for 10 ppm gasoil rose for a fifth straight session on Thursday, after middle distillate inventories in Singapore slumped to their lowest level in more than three years.
Cash differentials for gasoil with 10 ppm sulphur content, rose by 2 cents premium of 86 cents per barrel to Singapore quotes on Thursday, a level not seen since June, 2020.
Refining margins or cracks for 10 ppm gasoil slipped 82 cents to $13.93 per barrel over Dubai crude during Asian trading hours on Thursday as feedstock crude prices gained.
Singapore’s middle distillate inventories dropped 4.8% to 9.1 million barrels in the week to Nov. 10, their lowest since October 2018, according to Enterprise Singapore data. This week’s stocks were about 45% lower than a year earlier.
Cash differentials for jet fuel were unchanged at a premium of 35 cents per barrel over Singapore quotes.
The December crack for 500 ppm Gasoil is lower at $12.00 /bbl with the 10 ppm crack at $ 13.80 /bbl. The regrade is at -$ 0.70 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market firmed on Thursday, as tightening supplies of blendstocks are lowering the availability of finished grade VLSFO fuels, trade sources said.
Backwardation in the Dec/Jan VLSFO time spread climbed to $10.25 a tonne, up from $9 a tonne in the previous session and its highest since Feb 2020, Refinitiv data in Eikon showed.
Similarly, the front-month VLSFO crack nudged higher to $14.86 a barrel above Dubai crude, up 3 cents from Wednesday and near a two-year high of $14.90 a barrel touched on Monday, Refinitiv data showed.
Onshore fuel oil stocks fell by 570,000 barrels, or about 90,000 tonnes, to a three-week low of 21.75 million barrels, or 3.43 million tonnes, Enterprise Singapore data showed. The residual fuel stocks were 6% lower from year-ago levels, but slightly above the 2021 weekly average of 22.73 million barrels.
The December crack for 180 cst FO is lower at -$8.20 /bbl with the visco spread at $1.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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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.