Crude Oil
Oil fell below $65 a barrel on Friday in its first weekly loss since late November, erasing the week’s risk premium added since a U.S. drone strike killed a top Iranian general. Brent futures fell 39 cents to settle at $64.98 a barrel. WTI crude fell 52 cents to settle at $59.04 per barrel.
For the week, Brent had a 5.3% loss and WTI had a 6.4% decline
Investors also chose to focus on rising U.S. inventories and other signs of ample supply.
However, markets were still eyeing the longer-term risks of conflict, and prices were briefly supported on Friday by new U.S. sanctions on Iran in retaliation for its missile attack on U.S. forces in Iraq this week. Also, a Russian navy ship “aggressively approached” a U.S. Navy destroyer in the North Arabian Sea on Thursday, the U.S. Navy’s Bahrain-based Fifth Fleet said in a statement on Friday.
U.S. government data on Friday showed job growth slowed more than expected in December.
India’s oil demand growth is set to overtake China by mid-2020s, expecting to reach 6 MB/D by 2024, priming the country for more refinery investment but making it more vulnerable to supply disruption in the Middle East, the IEA said on Friday.
China will not change its position that Taiwan belongs to it, Beijing said on Sunday, after President Tsai Ing-wen won re-election in a landslide and said she would not submit to China’s threats, as state media warned she was courting disaster.
US energy firms reduced the number of oil rigs operating for a third week in a row, by 11 to total 659 (-214 YoY) as producers follow through on plans to slash spending on new drilling for a second year in a row in 2020, according to Baker Hughes.
Money managers raised their net long US crude futures and options positions in the week to 7 Jan’20, the US CFTC said on Friday. The speculator group raise its combined futures and options position in New York and London by 5,078 contracts to 331,553 during the period.
Naphtha
Asia’s naphtha crack rose to a 1-1/2 week high on Friday at $83.85 a tonne, thanks to buyers returning to purchase the fuel this week after muted buying interest over the year-end holiday season.
The combined volumes of that South Korea’s Hanwha Total, YNCC, Lotte Chemical, GS Caltex and Japan’s Asahi Kasei have bought last week for second-half February would have been more than 420 KT.
The premiums South Korea paid ranged from $17 to $21 a tonne to Japan quotes on a cost-and-freight (C&F) basis, depending on the grades and delivery ports.
India’s HPCL sold 30 KT of naphtha for Jan. 21-23 loading from Vizag to Gunvor at premiums of about $35 a tonne to its own price formula on a free-on-board (FOB) basis.
The January crack is higher at – $ 4.05 / bbl.
The February crack is at – $ 4.05 / bbl.
Gasoline
Asia’s gasoline crack recovered above $5 a barrel on Friday after it hit a 6-1/2 month low on Jan. 8 due to ample supplies.
Taiwan’s CPC Corp has cancelled a tender to sell 30,000 tonnes of gasoline for February loading from Kaohsiung this week as it decided against exporting the cargo at a time of ongoing tensions between the United States and Iran.
Gasoline stocks in ARA fell by 91 KT to 1.03 million tonnes.
The January crack is higher at $ 5.20 /bbl
The February crack is at 6.50 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil , which have dropped 59% over the last two weeks, were at 37 cents per barrel over Singapore quotes on Friday, 1 cent higher compared with Thursday.
Cash differentials for jet fuel were at a discount of 15 cents per barrel to Singapore quotes, compared with a 11-cent discount in the previous session.
Gasoil stocks in ARA rose by 88 kt to 2.57 million tonnes in the week ended January 9.
The January crack for 500 ppm Gasoil has dropped to $ 11.90 /bbl with the 10 ppm crack at $ 12.70 / bbl. The regrade is at -$ 0.70 /bbl
The February crack for 500 ppm Gasoil is at $ 12.95 /bbl with the 10 ppm crack at $ 13.75 / bbl. The regrade is at -$ 0.40 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month crack for 0.5% VLSFO dropped to $ 25.06 / bbl, its lowest in more than three weeks on Friday, but traders expect demand for the fuel to remain firm in the near term. It was at $28.31 a barrel on Thursday.
The January/February VLSFO time spread narrowed to $14.50 per tonne on Friday, compared with $17.50 per tonne on Thursday.
VLSFO has lately started to trade at levels comparable with marine gasoil (MGO), a type of diesel fuel used by tankers. That is an indication that refineries may need to increase production of VLSFO as tankers shift from dirtier, high-sulfur fuel to a cleaner product to comply with the IMO’s regulations designed to reduce smog.
China’s State Council, or cabinet, gave the go-ahead to waive taxes on the 0.5% VLSFO, smoothing the path for the final launch of the policy to kick off Chinese production of the fuel.
The 380-cst high-sulphur fuel oil (HSFO) barge crack for February inched up to a discount of minus $21.47 a barrel to Brent, compared with minus $21.85 a barrel on Thursday.
Fuel Oil stocks in ARA rose by 204 kt to 1.21 million tonnes.
The January 180 cst crack has strengthened further to -$ 11.25 / bbl with the visco spread at $ 2.05 /bbl.
The February 180 cst crack is at -$ 11.55 / bbl with the visco spread at $ 2.25 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action for 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.
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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.