Oil prices collapsed in one of their largest single day falls as funds exited long positions. Brent crude futures settled $4.65 lower at $65.47 a barrel. WTI crude futures settled $ 4.24 lower at $55.69 a barrel.
Both crude benchmarks shed more than 7% yesterday as U.S. President Donald Trump put pressure on OPEC not to cut supply to prop up prices. Both of them have fallen more than 20 percent since peaking at four-year highs in early October.
OPEC’s latest monthly report has forecast that Call on OPEC Crude will fall to 31.5 mb/d next year, about 500 kb / d below its forecast just two months ago and 1.4 mb/d below current production. OPEC Secretary Gen Barkindo said the resurgence of non-OPEC supply was starting to be “alarming” and added that he saw the need for OPEC+ to cut production by 1 mb/d when they meet in Vienna on Dec 6-7. This comes on the back of reports that the OPEC JMMC too saw the need to cut supply when they met last week.
Asia’s naphtha crack almost doubled to $15.68 a tonne on Tuesday, its highest in almost a week as demand for second-half December cargoes emerged.
South Korea’s KPIC and Hanwha Total were looking to buy naphtha, coming a day after GS Caltex paid a discount of about $3.50 a tonne to Japan quotes on a cost-and-freight (C&F) basis. KPIC, however, paid a discount deeper than $5 a tonne to Japan quotes on a C&F basis but the results of Hanwha Total were not immediately clear. Despite the demand, traders expect the supply glut to persist. Some 1.8 million tonnes of naphtha were provisionally booked for December arrival in Asia.
The November crack has has improved to – $ 7.75 / bbl. The December crack is at -$ 6.95 /bbl
Asia’s gasoline crack returned to the positive zone of 9 cents a barrel after it traded at a discount to Brent crude for between Nov. 8 and 12. But fundamentals stay weak due to ample supplies.
The November crack has improved to $ 1.85 /bbl. The December crack is at 1.95 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash premiums for 10ppm gasoil rose to 17 cents a barrel to Singapore quotes on Tuesday, from 16 cents a barrel on Monday.
Cash differentials for jet fuel flipped to a premium for the first time in two weeks as the prompt-month spread narrowed. They were at a premium of 11 cents a barrel to Singapore quotes on Tuesday, compared with a discount of 31 cents a barrel a day earlier. The cash market is not getting any strong support as temperatures have not yet fallen to colder levels, despite the beginning of winter season in November.
Some market watchers have warned that an El Niño effect might increase the chances of a warmer winter, and thus less heating requirements. There was a 70 percent chance it would continue into the Northern Hemisphere spring.
The November crack has shot up to $ 17.85 /bbl with the 10 ppm crack at $ 18.75 /bbl. The regrade is higher at $ 1.10 /bbl.
The December crack is at $ 17.95 /bbl with the 10 ppm crack at $ 18.90 /bbl. The regrade is at $ 1.40 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
The front-month 380-cst fuel oil barge crack to Brent crude slipped on Tuesday despite a drop in crude oil prices, with some trade sources pointing to an expected rise in arbitrage arrivals into Singapore.
The December 380-cst fuel oil barge crack to Brent crude was at a two-week low of minus $6.26 a barrel on Tuesday, compared with a discount of $6.14 a barrel on Monday.
The November 180 cst crack is higher at +$ 4.25 / bbl with the visco spread at $ 0.65 /bbl
The December 180 cst crack is at +$ 2.70 / bbl with the visco spread at $ 0.80 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
All cracks have strengthened following the tremendous crude drop. We are adding the following hedges
- Jet-Dubai for Dec18 at $ 19.35 / bbl
- Regrade for Cal-19 at $ 1.45 /bbl
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.