The prospects of a concerted action by OPEC could not over ride data from the DOE showing a build of 5.3 million barrels.
Brent settled lower by 32 cents / bbl at $ 46.63 /bbl while WTI settled at $ 45.57 / bbl, a loss of 24 cents on the day.
While Russia said they would support OPEC, Iran declined to attend an informal meeting this weekend. The head of the IEA said that US shale oil producers would increase their production if oil prices hit $60/bbl.
This pretty much puts a cap on oil prices for now even if OPEC announces and, more importantly, adheres to production cuts.
The Naphtha crack firmed up slightly. The window saw good buying in the prompt with prices for physical cargos much higher than reported all year.
While supplies of Naphtha are expected to increase by 200 KT in December to 1 Million tons, this is lower than the increase in supply last year. This could be a bullish factor for Naphtha.
On the other hand, with supplies of gasoline being abundant, there may not be that much of a problem caused by a reduction in supply.
The December crack was marginally stronger showing a value of $ 1.55 /bbl or 15 cents higher.
The Gasoline crack for December continued to ease as supplies seemed to be abundant. The value for the December crack is pegged just a shade over $10 / bbl.
As term contracts for 2017 are getting settled at levels generally lower than those for 2016, the gasoil crack eased out with Dececmber showing a value of around $ 11.5 /bbl.
Demand for jet stayed propped in expectation of a cold winter although the crack did ease. The regrade in January is now showing an increasingly attractive value of $ 1.35 /bbl
Fuel oil maintained its strength. While cargoes are arriving, traders are requiring product immediately. In addition to time taken for cutting the supplies, there could be a delay in discharging supplies as well. This is what is keeping the market supported.
We expect the market to ease going forward. In addition to the presence of supplies, the gasoil crack easing out by $ 1.50 / bbl from its peak, makes cutter stock significantly cheaper. Thus as cargoes get blended, we will see more offers in the market.
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.