Crude Oil
Oil prices dropped about 2 percent on Friday, weighed down by falling U.S. stock markets, while weak economic data from China pointed to lower fuel demand in the world’s biggest oil importer. Brent crude futures fell $1.17 to settle at $60.28 a barrel. WTI crude futures lost $1.38 to settle at $51.20 a barrel.
Brent posted a weekly loss of almost 2.3 percent, while WTI declined nearly 2.7 percent.
U.S. equity markets broadly fell as China’s November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years. The report added to nerves about U.S.-China trade relations.
Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand, though runs were 2.9 percent above year-ago levels.
U.S. energy firms cut four oil rigs in the week to Dec. 14.
The IEA kept its 2019 forecast for global oil demand growth at 1.4 million bpd, unchanged from its projection last month, and said it expected growth of 1.3 million bpd this year.
Hedge funds cut bullish wagers on U.S. crude to the lowest levels in more than two years in the week to Dec. 11.
Technical Analysis
We hope to update this section later today.
Naphtha
Asia’s naphtha crack rose for a third day to hit a 1-1/2 month high of $53.18 a tonne, supported by demand and a possible delay in some western cargoes arriving in the East.
There was demand from Japan, Taiwan, South Korea and Malaysia this week, with the buyers locking in more than 200,000 tonnes of naphtha for second-half January delivery.
The January crack is higher at -$ 3.35 /bbl
Gasoline
Asia’s gasoline crack was at a discount of 51 cents a barrel, the narrowest discount seen since Dec. 7 when the level was positive.
Gasoline stocks in ARA fell to 951 KT in the week to Thursday from 968 KT a week earlier.
China’s November refinery throughput rose from a year earlier, heading for an annual record, official data indicated on Friday, although the runs eased from highs touched in the previous two months as product inventories swelled and sales slowed. Refineries in November processed 50.46 million tonnes of crude oil, or 12.28 million barrels per day.
The January crack is lower at $ 2.10 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10ppm gasoil narrowed to 58 cents a barrel to Singapore quotes from a discount of 78 cents a barrel on Thursday. The December/January spread narrowed by 6 cents to 71 cents per barrel.
The differentials were helped by firmer buying interest in the physical market.
The gasoil East – West EFS, which determines the gasoil price spread between Singapore and Northwest Europe , was around minus $19 per tonne on Friday. This makes the potential for arbitrage tighter than it was in the past several weeks.
Gasoil stocks in ARA fell by 102 KT to 1.9 million tonnes in the week to Thursday. This is the ninth straight fall and stocks are currently at their lowest level in 3 years.
Cash discounts for Jet were at a discount of $1.07 a barrel to Singapore quotes, compared with a discount of 77 cents a barrel on Thursday.
The January crack is higher at $ 13.10 /bbl with the 10 ppm crack at $ 14.05 /bbl. The regrade is lower at $ 2.40 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 380-cst fuel oil crack traded near a two-month low at discounts over $7 a barrel on Friday amid limited trading activity.
Fuel Oil stocks in ARA rose by 234 KT to 1.3 million tonnes in the week to Thursday.
The January 180 cst crack has dropped to -$ 0.95 / bbl with the visco spread at $ 0.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The easing for Fuel Oil cracks has enabled us to close out one more position. Should Cal 19 distillate cracks ease a bit more, we will be able to close out a couple more positions.
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.