Crude Oil
Oil prices continued to recover notwithstanding a massive crude build reported by the DOE. Brent crude futures settled up 50 cents at $66.62 a barrel. WTI crude futures settled 21 cents higher at $56.46 a barrel.
The markets seemed to be more focused on the impact of future cutbacks by OPEC in 2019. It would also be reasonable to associate this price rise as an ongoing process of correction after a massive drop over the last two weeks.
Signs of economic slowdown in Europe seem to have appeared with Germany contracting 0.2% in Q3 2018. This is while the IMF reports that it expects global growth to continue at 3.7% for 2018 and 2019 although Germany, along with China and Japan, could be weak.
The DOE reported a heftier build (10.3 million barrels) in crude stocks than the API. While this may appear to be prima facie bearish, it is not accompanied by product stock builds which would actually make the picture look bearish. Furthermore, if we look at the material balance report below, it is hard to explain this level of build.
Gasoline stocks drew a little but the healthy draw in distillate stocks, cause primarily by an impressive increase in demand, should be supportive for both crude and product prices.
Naphtha
Asia’s naphtha crack continued its recovery on Thursday to settle at $23.15 a tonne, supported by demand from South Korea, Japan, China and Taiwan.
However, prices are reported to be in the range of discounts of $5 – $8 to CIF Japan quotes.
The November crack has has improved to – $ 6.00 / bbl. The December crack is at -$ 5.35 /bbl
Gasoline
Asia’s gasoline crack fell by 5 cents to 47 cents a barrel. In addition to high levels of inventories, traders expect increased exports from China.
Light distillate stocks in Singapore rose by over a million barrels to reach a 10 week high of nearly 13 million barrels.
The November crack has easaed to $ 1.65 /bbl. The December crack is at 1.75 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10ppm sulphur content fell to 10 cents a barrel to Singapore quotes on Thursday , compared with a premium of 19 cents a barrel on Wednesday. Premia were hurt by reduced buying interests in the physical market
Cash differentials for jet fuel fell to 18 cents a barrel to Singapore quotes from 24 cents a barrel a day earlier.
India posted diesel sales of 6.99 million tonnes in October 2018, an increase of 6.7% year on year and an increase of 16% over September.
Middle distillate stocks in Singapore fell by 343 KB to 9,817 KB, the first fall in three weeks.
The November crack has plunged to $ 17.15 /bbl with the 10 ppm crack at $ 18.05 /bbl. The regrade is higher at $ 1.30 /bbl.
The December crack is at $ 17.25 /bbl with the 10 ppm crack at $ 18.20 /bbl. The regrade is at $ 1.45 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Market sentiment eased on Thursday amid signs of rising fuel oil arbitrage flows into the Singapore hub over the past week, weighing on fuel oil cash premiums, cracks and time spreads.
The December 380-cst barge fuel oil crack to Brent crude was trading at about minus $5.45 a barrel on Thursday, compared with a discount of $5.20 a barrel in the previous session. The 380-cst Dec/Jan time spread also slipped to about $10.25 a tonne on Thursday, down from about $10.50 a tonne on Wednesday.
Similarly, lower deal values in the Singapore trading window sent 380-cst cash premiums to a three-week low of $7.94 per tonne to Singapore quotes on Thursday, down from $8.72 per tonne in the previous session.
Heavy distillate stocks in Singapore fell by 255 KB to 15.82 million barrels.
The November 180 cst crack is higher at +$ 4.50 / bbl with the visco spread at $ 0.45 /bbl
The December 180 cst crack is at +$ 2.90 / bbl with the visco spread at $ 0.80 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Gasoil cracks have plummeted today while Fuel Oil still stays strong.
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.