Crude Oil
Oil prices fell a further 2 percent and more on Monday, pressured by data showing weakening imports and exports in China that raised new worries about a global economic slowdown hurting crude demand. Brent crude futures lost $1.49 to settle at $58.99 a barrel. WTI crude futures fell $1.08 to settle at $50.51 a barrel.
Technology shares pulled Wall Street lower, after an unexpected drop in China’s exports in December re ignited worries over an global economic slowdown. China’s exports fell by the most in two years in December while imports contracted. Despite concern about the outlook, there is little sign that Chinese oil demand has weakened yet. China’s crude imports in December surged nearly 30 percent from a year earlier.
Saudi Arabia’s Energy Minister Khalid al Falih said on Monday that he is not worried about a global slowdown hurting oil demand as of yet. With the recent rally in prices, OPEC officials appear more confident that prices will be supported by output declines in January as producers implement the deal agreed to by the OPEC+ to cut oil output by 1.2 million barrels per day.
U.S. President Donald Trump on Monday rejected a Republican call for temporarily reopening shuttered U.S. government agencies in order to encourage negotiations with Democrats on border security issues, as a partial government shutdown limped through its 24th day.
British Prime Minister Theresa May urged lawmakers on Monday to take a “second look” at her deal to leave the European Union, a last-ditch effort to win over a parliament that looks set to reject the agreement.
Naphtha
Asia’s naphtha crack extended gains to reach a 1 1/2 week high of $44.68 a tonne on Monday. Naphtha trades were mostly muted following a string of purchases last week, mostly for cargoes scheduled for second half February delivery.
Japan’s Fuji Oil was one of those buyers that had bought naphtha for second half February delivery at a premium around the mid-single digit a tonne level to Japan quotes on a cost and freight (C&F) basis.
A South Korean oil buyer is set to receive about 2 million barrels of Iranian condensate in January, making this the first Iranian oil import by South Korea in four months after imports had to be stopped due to the United States re imposing sanctions on Iran.
The January crack is steady at -$ 5.00 /bbl.
The February crack is at -$ 5.05 /bbl.
Gasoline
Asia’s gasoline crack returned to the positive territory of 19 cents a barrel for the first time in nearly a week, supported by weaker feedstock crude oil prices.
The January crack has dropped to $ 0.50 /bbl.
The February crack is at $ 1.00 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for gasoil with 10ppm sulphur content widened their discounts to 40 cents a barrel to Singapore quotes, compared with a discount of 36 cents a barrel on Friday.
While the differentials are low, the gasoil market is supported by expectation of lesser barrels coming out of India, due to strong domestic demand and a likely drop in regional supplies as seasonal spring refinery maintenance begins in March.
Domestic diesel sales in India, which is one of the key players in the region, rose 6.5 percent to 7.37 million tonnes in December from 6.92 million tonnes in November, oil ministry data showed on Monday. The December sales were also up 3.5 percent from the same month last year. India’s domestic consumption pattern typically impacts the volume of the country’s exports, which in turn affects the overall supply in the region.
Meanwhile, cash differentials for jet fuel widened their discounts to $1.42 a barrel to Singapore quotes, the widest since August 2015. They were at a discount of $1.37 a barrel on Friday.
The January crack has dropped to $ 13.50 /bbl with the 10 ppm crack at $14.45 /bbl. The regrade is steady at $ 1.35 /bbl.
The February crack is at $ 14.05 /bbl with the 10 ppm crack at $15.05 /bbl. The regrade is at $ 1.55 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Sentiment in Asia’s fuel oil market was largely steady on Monday as fundamentals were little changed at the start of the week.
The front month 380 cst barge fuel oil crack slipped on Monday to about minus $6.32 a barrel to Brent crude from minus $6.19 a barrel in the previous session and its widest discount since Dec. 8.
The January 180 cst crack has dropped to -$ 0.50 / bbl with the visco spread at $ 0.35 /bbl.
The February 180 cst crack is at -$ 0.85 / bbl with the visco spread at $ 0.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
All cracks seem to be easing today. While this is good for our hedges, it may not be good for refiners at large.
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.