Crude Oil
Crude prices continued their descent as markets absorbed the impact of US production growth and stock builds. Brent slipped 51 cents lower to $61.36 /bbl. WTI eased 19 cents to close at $55.14 /bbl.
The slow descent augurs well for the market insofar as there appears to be an orderly unwinding of positions if the market is indeed headed downwards.
In other news, Saudi Arabia’s energy minister conceded that the IEAs opinion that markets will be in surplus till March 2018 is likely to be correct. This could be taken to indicate that supply cuts will be extended. However, he also mentioned that these cuts would be phased away gradually to ensure smooth market reaction. Much can be read into this statement. For one, it could indicate that the smaller producers are clamping at the bit to increase production given high prices and the bearish report. For another, it could mean that the next extension is likely to be not as long as the last one.
Naphtha
The physical Naphtha crack slipped to a two week low of $ 122.75 / MT on Tuesday as heavier volumes were seen arriving in December as compared to November.
The December crack has eased to $ 3.70 /bbl.
Gasoline
Light distillate stocks in Singapore (comprising mainly gasoline and gasoline blendstock) rose by 915 kb. China’s gasoline production in October rose to 11.66 million tonnes in October, 3.7% higher than the same time last year and the highest since December 2014 when China first started reporting these figures.
The December 92 Ron paper crack is unchanged at $ 11.20 /bbl.
Distillates
Distillate inventories in Singapore rose to a two month high of 12.05 million barrels last week. China’s diesel production was at a record high as well at 16.44 million tonnes, up 4.4% from last year. These figures could well weigh on cracks.
The December 0.05% Gasoil crack is valued lower at $12.65 /bbl. The regrade continues to slip to $ 0.80 /bbl. The Q1 regrade is also around 80 cents / bbl. In our OPD of 9th November, we had recommended hedging this spread.
Fuel Oil
Cash premiums for Fuel Oil strengthened yesterday amid aggressive buying in the Platts window.
Fuel Oil stocks were marginally (65 kb) lower than last week. This was inspite of imports into Singapore falling to a 3 month low of 430 KT, 40% lower than the previous week. Fuel Oil stocks are at a 6 week low and below 2016 levels for the first time in five weeks.
China’s fuel oil production rose 4.6% from last year to 2.38 million tonnes.
The December 180 cst crack is marginally lower at -2.30 /bbl. The visco spread is wider $ 1.00 /bbl.
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