Crude Oil
Oil prices fell nearly 2 percent on Friday as investors worried about a global economic slowdown. Brent crude futures dropped $ 1.20 to settle at $60.48 a barrel. WTI crude futures fell 100 cents to settle at $51.59 a barrel.
There would also have been an element of profit taking at the end of the week and even fortnight with the drop coming after a nine day winning streak as it were.
Nevertheless, both benchmarks saw their second week of gains, with Brent rising about 6 percent and WTI up about 7.6 percent.
Market participants remained cautious about a slew of recent economic data that has raised concerns about a global economic slowdown. China plans to set a lower economic growth target of 6.0 – 6.5 % in 2019 compared with last year’s target of “around” 6.5 % as Beijing gears up to cope with higher U.S. tariffs and weakening domestic demand.
Also, prolonged shutdown of U.S. government, into 23rd day of the longest shutdown ever, is weighing on market sentiment
On the bullish side, Russia has reduced its oil production to 11.38 mb/d on average on Jan. 19 from a record high of 11.45 mb/d last month.
Active rigs in the USA dropped by 4 to 873 last week as per the Baker Hughes Report.
Naphtha
Asia’s naphtha crack extended gains for the second day to reach a four-session high of $40.45 a tonne on Friday, with support from a string of purchases this week and expectations of fewer eastbound cargoes arriving in the East next month.
Several Japanese and South Korean buyers were in the market this week, mostly to buy naphtha for second-half February delivery.
The January crack has improved to -$ 5.00 /bbl.
The February crack is at -$ 5.00 /bbl.
Gasoline
Asia’s gasoline crack stayed at a discount for the third day but the discount level narrowed to 14 cents a barrel versus 22 cents in the previous day.
Singapore’s onshore light distillates stocks had eased by about 4.2 percent from the record high last week to reach around 15.43 million barrels in the week to Jan. 9. Gasoline stocks held in ARA edged down as well by 0.5 percent from over a nine-month high last week to 1.367 million tonnes in the week to Thursday.
India’s Reliance Industries Ltd , operator of the world’s biggest refining complex at Jamnagar in western Gujarat, will shut one of its crude refining units from Jan. 16 for about 4 weeks for maintenance. This may provide some succour to the overburdened gasoline market
The January crack has dropped to $ 0.95 /bbl.
The February crack is at $ 1.45 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10ppm sulphur content were at a discount of 36 cents a barrel to Singapore quotes, compared with a discount of 39 cents a barrel on Thursday.
The firming up is attributed to middle distillate inventories in Singapore drawing down to the lowest levels in three weeks. Stocks in Singapore dropped by 200 KB to 11.1 million barrels. Gasoil stocks in ARA, however, increased marginally to 2.05 million tonnes.
The prompt-month time spread, which has remained in a contango since mid-November, has narrowed about 47 percent since the beginning of this month to be at a discount of 41 cents per barrel on Friday.
Cash discounts for jet fuel were at $1.37 a barrel to Singapore quotes on Friday, the widest levels since August 2015.
The January crack has dropped to $ 13.70 /bbl with the 10 ppm crack at $14.65 /bbl. The regrade has dropped to $ 1.35 /bbl.
The February crack is at $ 14.25 /bbl with the 10 ppm crack at $15.20 /bbl. The regrade is at $ 1.65 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Elevated buying interest for 380cst HSFO cargoes in the Singapore trading window lifted cash premiums of the fuel to a more than one-week high on Friday. The 380cst fuel oil cash premiums rose to $3.79 a tonne to Singapore quotes, up from $3.52 a tonne in the previous session and its highest since Jan. 3.
By contrast, however, lower deal values for lower viscosity 180cst HSFO cargoes on Friday weighed on cash premiums of the fuel to a $1.84 a tonne to Singapore quotes, its lowest since Sept. 10.
Meanwhile, Singapore fuel oil inventories fell 6 percent to a six-week low in the week ended Jan. 9. Onshore fuel oil stocks fell 1.11 million barrels to 18.94 million barrels. ARA fuel oil inventories jumped 24 percent in the week to Jan. 10, by 286 KT to 1.49 million tonnes, their highest since early July. Exports of fuel oil have been low but a VLCC was currently berthing to load up on the product now and would likely head to Singapore..
The January 180 cst crack has eased to $ 0.05 / bbl with the visco spread at $ 0.45 /bbl.
The February 180 cst crack is at -$ 0.50 / bbl with the visco spread at $ 0.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The regrade seems to have eased off fairly significantly from its highs at the start of the year. Fuel Oil cracks too seem to be easing off. We will have to wait and watch to see what happens to the Cal 20 cracks for a few days even months.
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.