Crude Oil
Crude Oil prices settled higher for the fifth session in a row on Friday, holding near their strongest levels since late 2014 amid ongoing optimism that OPEC-led output cuts would continue to drain the market of excess supplies. Brent settled 61 cents higher at $ 69.87 /bbl. WTI settled 50 cents higher at $ 64.30. This is its highest settle since late 2014
Both markers posted strong weekly gains for the fourth week in a row. While Brent posted a weekly gain of 3.3%, WTI gained roughly 4.7% for the week. Oil prices have gained 13% since early December benefiting from various events whose occurrence individually caused a spur which failed to reverse on the end of the event.
Going forward, analysts have been warning that first of all, a correction is overdue. Secondly, the high prices could spur increased US production. As if to underscore this statement, the rig count in the US rose by 10 rigs to 752 as per the Baker Hughes weekly report.
On the other hand, money managers boosted their bullish WTI bets in futures and options by 46,000 lots last week to a total of 501,000 lots. Combined with ICE Brent where net length increase by 8,700 lots, the total net lenght of the two benchmarks combined are now sitting at a record high of 1.075 million lots i.e. a billion barrels of oil.
Technical Analysis
Both, the daily and weekly charts continued to exhibit bullish trends. This is evidenced by the weekly prices moving out of a sharply rising channel last week. However, such steep channels are difficult to maintain for a long time. Further, the RSI on both charts indicate extremely overbought situations pointing to imminent correction.
Supports are at $ 69.43, $ 68.95 and $ 68.62. Resistances are $ 70.03, $ 70.69, and $ 71.10.
For this week, we would recommend selling the futures with a strict stop loss at $ 71.10.
Naphtha
The Asian naphtha physical crack moved up by 24 cents on Friday to settle at $92.28 /MT. However, short to medium term outlook remains bearish due to high inventories, surplus supplies and listless demand.
The balance January naphtha crack is valued higher at $ 0.45 /bbl while the February crack is at $ 0.50 /bbl.
Gasoline
Akin to naphtha, the physical gasoline market also continues to reel under bearish sentiments due to excess supplies vis a vis poor demand. The Asian gasoline physical crack settled at a five-day low of $ 7.07 /bbl on Friday.
The balance January crack is lower at $ 10.25 /bbl while the February crack is valued at $ 11.30 /bbl.
Distillates
Gasoil cracks moved slightly lower amid a quiet Platts Asian Trading Window which saw no gasoil deal and only one ATF deal getting concluded. Overall, the Asian market at the moment appears balanced to slightly weak.
The balance January crack has eased to $ 13.80 / bbl with the 10 ppm Gasoil crack valued at $ 15.10 /bbl. The regrade has improved to $ 1.00 /bbl. The February crack is valued at $ 14.15 /bbl with the 10 ppm crack at $ 15.35 /bbl. The February regrade is valued at $ 0.90 /bbl.
Fuel Oil
Concerns of sluggish demand and ample supplies in the near term continue to dog the Fuel Oil market.
The Asian Platts Trading Window was quite active with 5 trades of 380 cst grade totaling 100,000 MT changing hands on Friday. Hin Leong purchased 80,000 MT of this total quantity with Gunvor picking up the balance 20,000 MT.
The balance January 180 cst crack has eased to -$ 6.35 /bbl today while the visco spread is unchanged at $ 0.30 /bbl. The February 180 cst crack is valued at -$ 5.65 /bbl with the visco spread valued the same as that for balance January.
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.
Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity