Oil climbed more than 2 percent on Thursday after the IEA’s monthly Oil Market Report suggested that stocks could decline rapidly if the OPEC+ group’s proposed production cut was introduced. Brent crude futures settled $ 1.30 higher at $61.45 a barrel. WTI rose $ 1.43 to settle at $ 52.58 a barrel.
OPEC’s output agreement with Russia and Canada’s decision to mandate production cuts could create an oil market supply deficit by the second quarter of next year, if top producers stick to the deal, the International Energy Agency said in its monthly Oil Market Report.
In our opinion, there are too many imponderables in this statement to warrant a wave of bullishness, so the buying may have been more a reduction of short positions than an initiation of fresh longs.
Asia’s naphtha crack extended gains to hit a 1-1/2 week high of $42.28 a tonne on Thursday as strong demand helped soak up excess supplies.
According to market reports, cargoes are trading at a discount of $ 1.50 – $ 2.00 to CIF Japan quotes as compared ot $ 4.00 last week and $ 7.00 around the start of the month.
The December crack is higher at -$ 4.10 /bbl. The January crack is at -$ 3.50 /bbl
Asia’s gasoline crack hit a discount of 93 cents a barrel versus a discount of 81 cents in the previous day.
What was once a profitable fuel for refiners is now in a persistent glut. Even though light distillate stocks in Singapore declined by 246 KB to a 13.63 million barrels, stocks are pretty much at seasonal highs.
The Asian gasoline crack level was at a premium of $9.79 a barrel a year ago. Given that stocks were at the same levels at that time should give hope to refiners that the mood of the market will change in a while.
The December crack is higher at $ 1.25 /bbl. The January crack is higher at $ 2.45 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for 10ppm gasoil widened to 78 cents a barrel to Singapore quotes against a 75-cent discount on Wednesday.
Asia’s cash discounts for jet fuel widened on Thursday on sluggish buying interests in a market awash with supplies, while onshore middle distillate inventories rose to their highest levels in three weeks. Cash differentials for the aviation fuel were at a discount of 77 cents a barrel to Singapore quotes, compared with a discount of 73 cents a barrel on Wednesday.
Singapore onshore middle-distillate stocks rose 2.8 percent to 10.9 million barrels in the week to Dec. 12. Overall, onshore middle-distillate inventories were about 5 percent higher than a year ago.
The December crack is higher at $ 12.20 /bbl with the 10 ppm crack at $ 12.95 /bbl. The regrade is higher at $ 2.35 /bbl
The January crack is higher at $ 13.05 /bbl with the 10 ppm crack at $ 14.00 /bbl. The regrade is steady at $ 2.55 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 380-cst high-sulphur fuel oil cash premiums swung to a two-session high on Thursday amid higher deal values for physical cargoes of the fuel in the Singapore trading window.
The 380-cst fuel oil cash premiums rose to $4.88 a tonne to Singapore quotes, up from $4.30 a tonne in the previous session. At the start of December, 380-cst cash premiums were at $8.97 per tonne.
In the paper markets, the January 380-cst barge crack against Brent crude was bid higher to about minus $7.10 a barrel, from about minus $7.60 a barrel on Wednesday, but liquidity was thin.
Meanwhile, Singapore fuel oil inventories snapped three straight weeks of builds as stocks dipped by 244 KB to 19.59 million barrels.
The December 180 cst crack has dropped to +$ 0.45 / bbl with the visco spread at $ 0.55 /bbl.
The January 180 cst crack has dropped to -$ 0.45 / bbl with the visco spread at $ 0.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Over the last couple of days we have managed to close a couple of Fuel Oil positions.
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.