Crude Oil
Oil settled on a mixed note on Friday, with prices notching their third-consecutive weekly loss amid concerns over rising production in the U.S. Brent eased 8 cents to at $63.23 /bbl while WTI settled up 26 cents to settle at $57.30 / bbl.
Both Brent and WTI however, posted their third straight weekly loss with Brent easing 0.3% and WTI 0.1%. Speculators cut their long positions in WTI futures and options for the 2nd week in a row by 7,542 contracts to 435 K lots. However, ICE Brent net longs positions have increased to 544 K lots
For now, the force majeure (stopping of performance for reasons beyond normally foreseeable circumstances / natural disasters) on Brent is acting as a major prop for crude. Bulls will also be cheered by the drop in active oil rigs by 4 to 747 this week.
Technical Analysis
The charts indicate that Brent prices are in a truly mixed zone. Both the daily and the weekly charts are showing two consecutive ‘spinning top’ candles which are indicative of an uncertain market.
However, if we look at the MACDs in the two charts an interestingly divergent picture is emerging. While the weekly chart shows the MACD slowly heading downwards and to a cross over from above (a bearish sign), the MACD on the daily charts shows the MACD moving towards a cross over from below if we compare data from 8th and 15th December. This despite the weekly close of prices being negative.
Supports lie at $ 62.88, $ 62.20 and $ 61.28 for now. Resistances lie at $ 63.44, $ 63.99, $ 64.78 and then $ 65.78.
We had earlier recommended staying long with a tight stop loss. Our view on the market remains the same. We would also recommend the lightening of long positions and hedging them with puts.
Naphtha
Fresh spot demand emanating from China as well as sustained firm demand from Japanese and South Korean petrochemical makers is unable to support cracks which have weakened over the last couple of days.
The January Naphtha crack is valued lower at $ 3.25 /bbl
Gasoline
Gasoline cracks remain under pressure as demand is lackluster in markets that are well supplied. The only fresh Asian demand seen in the market is from Indonesia’s Pertamina which is seeking over 800,000 bbls of gasoline for January 2018.
The January crack is now valued lower at $ 11.20 /bbl.
Distillates
Distillate markets are expected to improve in the wake of strengthening demand within southeast Asia with diesel shipments to Indonesia and Myanmar increasing from previous months. On the supply side, exports from India are now slowing as the domestic demand is beginning to pick up.
The January gasoil crack however continues to slide and is valued at $ 13.40 / bbl. The regrade is unchanged at $ 0.75 /bbl
Fuel Oil
Fuel oil cracks are valued lower amid expectations that the total fuel oil flows into East Asia for December will be close to a 10-month high of approximately 6.5 million MT. In sharp contract however, the January arrivals are expected to be substantially lower, with just 1.4-1.5 million MT notionally assessed so far and less than three weeks of the West-to-East tanker-fixing window left open.
The 180 cst January crack is valued lower at 3.50 /bbl with the visco spread unchanged at $ 0.65 /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