Crude Oil
Oil prices saw some more profit taking happening on the last day of the week. Brent fell by 56 cents to $55.45 /bbl and WTI fell by 64 cents to $52.37 /bbl.
This week promises to have more excitement as speculation continues on the actual supplies available.
On the positive side we are hearing comments that even 80% compliance by OPEC will ensure support to crude prices. Arguably even 50% is acceptable.
The flip side to that is that even OPEC is acknowledging that compliance is not happening! In the meanwhile, Libya’s production has increased to 750 kbd. And the US domestic production has increased to 8.95 mbd, the highest levels since April 2015. In another development, US refiners were seen buying Maya crude (Mexican) for the first time since 2008.
Naphtha
Naphtha prices eased up a little on Friday with the crack for February easing out by around 30 – 50 cents from February’s level of $1.85 / bbl.
With supplies in February around 40% lower than January, the status of ADNOCs Ruwais refinery could flare this crack. The exact status of the refinery is unclear for now. While ADNOC insists that its production has not been affected, it offered some crude for prompt loading suggesting that it could not process the same at Ruwais.
Gasoline
The Gasoline crack is steady for now. The February crack is valued at $ 13.2/bbl today.
The crack levels continue to remain attractive hedges. While a spur in naphtha, could push gasoline prices up, the extent of correlation may well reduce at higher crack levels given stock levels and independent gasoline demand levels.
Middle Distillates
Refinery fires in the Middle East and Russia are appparently flaring cash differentials. However, this is not translating into higher cracks for middle distillates. The gasoil crack dropped about 40 cents to $11.30 /bbl. The Regrade continues to be valued at $ 0.60 /bbl
Fuel Oil
Fuel Oil continues its amazing strength. Prompt demand has raised the value of the February crack to -$0.75 /bbl and the March crack at -$ 1.40 /bbl
We would repeat our recommendation to refiners to hedge the crack at this level.
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