Oil continued to climb up aided by repeated statements by producers that they were adhering to the committed cuts. Brent rose by $ 0.91 to $56.01/bbl while WTI rose by $ 0.76 to 53.01 /bbl
Another bullish news in the market was that China expects its demand for crude oil to rise to 12 million bpd in 2017.
We need to see evidence of the cuts and their impact at ground level. The coming weeks will tell
The shortage of supplies further improved strength in Naphtha. This was exacerbated by reports of a fire in the Ruwais refinery in Abu Dhabi. Although ADNOC states that the refinery was not affected, traders believe that the entire 420 kbd refinery may remain shut for 2 weeks. The February Naphtha crack was valued at $ 1.85 / bbl while the March Crack was valued in excess of $ 1.00 / bbl.
We continue recommending hedging February at these levels as also March should one obtain a positive bid for the crack.
The Gasoline crack is also increasing in strength along with Naphtha. The February crack is valued at $ 13.15/bbl today.
We would recommend commencing hedging gasoline at levels in excess of $ 13.00 / bbl bearing in mind the fact that stock levels of light distillates in Singapore have been rising. Since Naphtha is so much in demand, the rise has to be attributed to Gasoline.
Source : Bloomberg
While China has indicated that its crude consumption will increase in 2017, they warned of a possible glut in driving fuels during the year.
Middle Distillate stocks fell for the 4th straight week by 575 tons to drop below the five year average
Source : Bloomberg
Nevertheless, this did not have much impact on the gasoil crack which dropped about 10 cents to $11.70 /bbl. The Regrade continues to be valued at $ 0.60 /bbl
Fuel Oil strengthened in the prompt inspite of stocks rising by 3.2 Million tons. The February crack is valued at -$1.15 /bbl and the March crack at -$ 1.70 /bbl
We would repeat our recommendation to refiners to hedge the crack at this level.
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.
Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity