Oil continued to fall as perceptions of geopolitical risk fell further. Brent futures fell 78 cents to settle at $64.20 a barrel. WTI crude fell 96 cents to settle at $58.08 per barrel.
The US Treasury Department on Monday dropped its designation of China as a currency manipulator days before top officials of the world’s two largest economies were due to sign a preliminary trade agreement to ease an 18-month-old tariff war. The Trump administration has invited at least 200 people to a ceremony for the signing, but the two nations have not yet finalised details of what will be signed, White House officials said on Friday.
Venezuela is allocating cargoes to joint-venture partners including Chevron, which in turn market the oil to customers in Asia and Africa, testing a new method to get its crude to market. This would not violate sanctions as long as sale proceeds are used for paying off a venture’s debts.
India’s annual retail inflation has accelerated to its highest level in more than five years, hitting 7.35% in Dec’19 from 5.54% in Nov’19, increasing the likelihood of an extended pause in the central bank’s rate cutting cycle.
Asia’s naphtha crack rose for the third straight session on Monday to a two-week high of $90.78 a tonne on an expected shortfall in supply due heavy refinery maintenance.
Some of these refineries include Saudi Aramco Total Refining and Petrochemical Company (SATORP) and Adnoc’s Ruwais facility. This will keep spot premiums firm despite 5-10% run cuts in some of Asia’s naphtha crackers to combat high feedstock costs.
The January crack is higher at – $ 3.15 / bbl.
The February crack is at – $ 3.30 / bbl.
India’s December domestic sales of gasoline, or petrol, were 3.2% higher from a year earlier at 2.47 million tonnes. This marks the 28th consecutive year-over-year rise but it was petrol’s lowest percentage rise since May 2018.
The January crack is higher at $ 5.85 /bbl
The February crack is at 7.25 / bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10 ppm gasoil climbed to 43 cents per barrel over Singapore quotes on Monday, up from 37 cents a barrel on Friday. Cracks for the benchmark gasoil grade in Singapore fell 26 cents to $13.72 per barrel over Dubai crude on Monday.
Cash differentials for jet fuel flipped to a premium of 16 cents per barrel to Singapore quotes on Monday, compared with a discount of 15 cents a barrel on Friday.
The January/February time spread for jet fuel also returned to a narrow backwardation on Monday to trade at a premium of 15 cents a barrel, compared with a discount of 6 cents per barrel on Friday.
Asian refining margins for jet fuel slipped to their lowest in more than eight months on Monday, hurt by weakness in the aviation sector and lacklustre seasonal demand for the closely-related kerosene.
Warmer-than-usual winter temperatures have kept a lid on the usual demand surge so far this year.
However, recent positive developments in the U.S.-China trade talks alongside signs of improving business confidence could provide an uptick in aviation travel demand, the International Air Transport Association (IATA) said in statement last week.
The January crack for 500 ppm Gasoil has dropped to $ 11.55 /bbl with the 10 ppm crack at $ 12.10 / bbl. The regrade is at -$ 0.80 /bbl
The February crack for 500 ppm Gasoil is at $ 12.60 /bbl with the 10 ppm crack at $ 13.15 / bbl. The regrade is at -$ 0.55 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Deal values for cargoes of VLSFO were at about $35-$37 per tonne on Monday, up from around $29 per tonne on Thursday when cargoes of the fuel last exchanged hands in the Singapore window. VLSFO time spreads and crack values also recovered following sharp losses on Friday.
The VLSFO market fell on Friday following reports that China approved a long-awaited tax waiver on exports of cleaner ship fuel, paving the way for refiners to boost output. China’s State Council, or cabinet, gave the go-ahead to waive taxes on VLSFO, smoothing the path for the final launch of the policy to kick off Chinese production of the fuel.
However, Beijing is likely to restrict, or even ban, wholesale exports of the ship fuel, to let companies focus on growing the domestic marine fuel market, as coastal cities like Zhoushan in eastern Ningbo province aims to become a regional bunkering hub.
Chinese refiners will supply the new VLSFO to bonded storages along the country’s coast, and from there they will be retailed to ships by about a dozen licensed bunker dealers.
The January 180 cst crack has weakened to -$ 11.70 / bbl with the visco spread at $ 2.20 /bbl.
The February 180 cst crack is at -$ 12.25 / bbl with the visco spread at $ 2.20 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
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.
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.