As we had remarked yesterday, crude levels did appear attractive to buyers as they pushed up crude on the possibility that OPEC may well cut production. The rationale for this is as follows (not our rationale)
- OPEC will never come to an agreement so far away from an agreement date
- All players have reported record levels of production. Some analysts say that there may even have been double counting by them.
This will allow them to ‘cut’ output without losing face anywhere
- For the immediate future some action seems to be imperative in the face of price movements.
Brent finished higher by over $ 2.5 / bbl to settle at $ 46.95 /bbl while WTI settled at $ 45.81 / bbl, a similar gain.
These were pared somewhat this morning after API reported a build of 3.65 million barrels in US crude stocks. If this build is reaffirmed by the DOE today, we don’t see this rally resuming till next week.
The Naphtha continued to ease. The December crack is being given a value of $ 1.38 /bbl which is approximately $1 / bbl lower than yesterday.
The Gasoline crack for December eased significantly to around $10.45 / bbl for December as Sinochem was seen offering a term contract for supply for 2017, something it had not done. It may soften further as the Colonial pipeline operations have got stabilized in this week.
Gasoil continued softening as markets expected an increase in supply out of Korea as Hyundai Chemical starts its splitter next month. However, export from China could decrease in December as Chinese producers appear to be getting higher margins for local sales.
Demand for jet could increase amid forecasts of a cold winter.
The fuel oil crack eased significantly in the face of tightness in the prompt market as traders were seen offering aggressively expecting fresh supplies to come in towards the end of the month. The value of the December crack fell by 20 cents to -$ 1.75 /bbl. i.e. lower by around 5 cents.
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.