Crude Oil
Crude Oil prices finally took a breather as traders appeared to take profits after failing to breach the $ 70 level. Brent settled $ 1.11 lower at $ 69.15 /bbl. WTI eased 57 cents to settle at $ 63.73.
While oil is vulnerable to profit taking as hedge funds and money mangers have amassed a record number of bullish bets on U.S. crude, there is a strong bullish sentiment still running as evidenced by the same positions.
Another factor that could have a bearish influence on prices is a report by China National Petroleum Corp (CNPC) on Tuesday that China’s 2018 oil demand may rise at a slower pace of 4.6% to 615 million tons. This is because of the country’s shifting economic structure, property market adjustment, renewables, and stricter enforcement of anti-pollution measures.
Trading was thin on Monday due to the Martin Luther King Jr. Day holiday in the United States. Yesterday though, crude prices were unable to sustain above $ 70 / bbl for long.
Markets will look to the API data being released today for guidance.
Naphtha
The Asian naphtha physical crack continued to take a beating, settling yesterday at $86.55 /MT. This level has not been seen since August 29 last year.
Persistent lower volumes coming to Asia from the Middle East failed to lift sellers’ sentiment as this was likely offset by high incoming Western cargoes and Asia’s top naphtha importer Formosa returning to substitute the fuel with LPG.
Middle East naphtha volumes arriving in Asia this month are seen at 2.3 million tonnes to 2.4 million tonnes. Not only was this lower than 2017’s monthly average of 2.8 to 2.9 million tonnes, it was also the lowest monthly volume seen arriving in the East in 19 months.
The February crack has recovered a bit to $ 0.50 /bbl.
Gasoline
Asia’s gasoline crack to Brent increased marginally to $7.14 /bbl. For now, especially with a strong winter in the US, gasoline cracks are expected to stay depressed.
The February crack has increased to $ 10.85 /bbl.
Distillates
Jet fuel prices continued to stay around $ 82 / bbl. Gasoil fundamentals are expected to stay weak due to higher supplies from China. China’s net diesel exports this year could rise 47 percent to 23.8 million tonnes as a result of a swelling surplus in refining capacity and fuel production, as per the forecast from CNPC
The February gasoil crack is marginally higher today at $ 14.40 /bbl with the 10 ppm crack at $ 15.60 /bbl. The February regrade is marginally lower at $ 0.85 /bbl.
Fuel Oil
Sellers appeared in droves in the window as the Chinese New Year demand brought some cheer to the market. The strong selling interest brought cash premiums on the 380 cst grade down to their lowest in nearly a week. )
The February 180 cst crack is now below -$ 6 /bbl at -$ 6.20 /bbl. The visco spread has blown to $ 0.55 / bbl. reflecting the weakness in the 380 cst grade.
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