Crude Oil
Oil prices eased on Thursday as U.S. crude futures were pressured by a build in domestic inventories and record production. Brent crude futures dipped 9 cents to settle at $62.28 a barrel. WTI crude fell 35 cents to settle at $56.77 a barrel.
Investor sentiment nevertheless remained optimistic as OPEC forecast lower-than-expected oil surplus.
OPEC Secretary General Mohammad Barkindo also said on Wednesday that there would likely be downward revisions of supply going into 2020, especially from U.S. shale. Barkindo said it was too early to say whether further output cuts would be needed.
Prices were also capped by mixed signs for oil demand in China, the world’s biggest crude importer. Industrial output rose more slowly than expected in October, but oil refinery throughput hit the second-highest level on record.
doe data
The EIA reported an increase in US crude stocks as oil production hit a fresh record high of 12.8 million bpd. Nevertheless, the massive decrease in net imports would seem to suggest a draw this week as per our material balance statement below.
Gasoline stocks were boosted by both an increase in imports coupled with a decrease in exports. A healthy growth in demand, however, tempered the increase. Distillate stocks continue to decrease as a good increase in demand, coupled with increased exports offset the production growth.
Product stock levels appear to have been understated if one is to go by the material balance statement even as crude stock levels appear to be overestimated. Nevertheless, it seems to be fairly obvious that the OPEC supply cuts do not appear to be affecting stocks in the US by much.
Naphtha
Asia’s naphtha crack rose for a fifth straight session on Thursday to reach a 1-1/2 week high of $79.35 per tonne, supported by strong demand.
Several buyers were in the market this week, including those from Japan, China, South Korea and Taiwan.
The November crack is lower at – $ 3.45 / bbl.
The December crack is at – $ 3.10 / bbl.
Gasoline
Asia’s gasoline crack fell to a five-session low of $8.88 per barrel as uncertainty over China’s export volumes weighed.
In Singapore, gasoline inventories were at a five-week low of 10.67 million barrels in the week to Wednesday, data from Enterprise Singapore showed.
The November crack has crashed to $ 8.10 /bbl
The December crack is at $ 7.25 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10 ppm sulphur content , which have dropped about 67% over the last two weeks, were at 32 cents per barrel to Singapore quotes on Thursday. They were at a premium of 30 cents per barrel a day earlier.
The gasoil cracks have declined in recent weeks as some regional refineries return to production after maintenance, while export volumes from state refiners in India have surged on the back of weaker demand in its domestic market.
The expected jump in demand due to IMO 2020 has not yet materialized as buyers have delayed purchases until absolutely necessary.
Cash differentials for jet fuel widened their discounts by 3 cents to 62 cents per barrel to Singapore quotes on Thursday, hurt by persistently muted demand for physical cargoes.
Middle distillate inventories in Singapore dropped to a four week low of 10.17 million barrels.
The November crack for 500 ppm Gasoil is higher at $ 12.85 /bbl with the 10 ppm crack at $ 13.85 / bbl. The regrade is at $ 0.70 /bbl
The December crack for 500 ppm Gasoil is at $ 14.25 /bbl with the 10 ppm crack at $ 15.20 / bbl. The regrade is at $ 0.90 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s high-sulphur fuel oil (HSFO) market extended losses on Thursday, with 380-cst HSFO cash differentials and time spreads slipping into negative territory, as demand continued to fall for high-sulphur bunkers.
The cash premiums for 380-cst plunged to a near four-year low of minus $4.90 per tonne to Singapore quotes, from plus $1.86 per tonne in the previous session.
The front-month Dec/Jan 380-cst time spread also slipped into negative territory at minus $2.50 per tonne, hitting its lowest since June 2016, down from plus $1 in the previous session.
Residual fuel oil inventories in Singapore fell to a six-week low of 20.355 million tonnes in seven days to Nov. 13 despite higher net imports, official data showed on Thursday.
The November 180 cst crack is lower at -$ 27.00 / bbl with the visco spread at $ 0.50 /bbl.
The December 180 cst crack is at -$ 24.00 / bbl with the visco spread at $ 1.85 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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.