Crude Oil
Oil prices rose more than 1% on Tuesday, supported by hopes the U.S.-China trade deal will bolster oil demand in 2020 after a prolonged dispute between the world’s two largest economies dented global market sentiment. Brent crude settled 66 cents higher at $66.10 a barrel, and WTI oil rose 73 cents to $60.94 a barrel.
The Phase 1 agreement between the United States and China has been “absolutely completed,” Larry Kudlow, a top White House adviser, said on Monday, predicting U.S. exports to China will double under the deal. The Phase 1 agreement does not mean tensions are going to fully dissipate anytime soon. The prolonged trade dispute has dampened oil demand and weighed on prices.
China and Russia are pushing the UN Security Council to lift some sanctions on North Korea to ease the country’s humanitarian concerns and to “break the deadlock” in stalled denuclearization talks between Washington and Pyongyang, China’s UN ambassador said on Tuesday.
The US may increase tariffs on European goods as it seeks to slash its chronic trade deficit with the continent, the US Trade Representative said on Tuesday, highlighting a top trade priority for the Trump administration.
api data
U.S. crude inventories rose by 4.7 million barrels in the week to Dec. 13 to 452 million, data from API showed late on Tuesday. With products showing builds as well, the data is slightly bearish in nature. Official government data on stockpiles is due on Wednesday.
Naphtha
Asia’s naphtha crack fell for a third session straight to a near one-month low of $92.05 a tonne on Tuesday, amid an improved supply outlook.
Rising costs of naphtha recently also tempered demand for the fuel as high feedstock costs squeezed petrochemical margins.
The January crack is higher at – $ 3.95 / bbl.
Gasoline
No fresh news on the Gasoline markets.
The January crack is lower at $ 5.75 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10ppm gasoil climbed to 65 cents per barrel over Singapore quotes on Tuesday, up from 60 cents per barrel in the previous session.
Cash differentials for jet fuel fell to a premium of 5 cents per barrel to Singapore quotes on Tuesday, down from a 35-cents premium a day earlier.
Temperatures in Tokyo are expected to stay well above normal for the next couple of weeks, while temperatures in Seoul would remain mostly higher than normal over the next 15-day period which makes the outlook for Jet slightly bearish.
The January crack for 500 ppm Gasoil is higher at $ 15.15 /bbl with the 10 ppm crack at $ 15.95 / bbl. The regrade is at $ 0.30 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month barge 380-cst high-sulphur fuel oil (HSFO) margin over Brent crude, or crack, on Tuesday slipped to more than a one-week low, pulling away from a near six-week high a week ago.
The January 380-cst barge crack widened its discount to minus $28.41 per barrel, from minus $28.15 in the previous session.
HSFO margins are likely to find support around recent levels due to emerging pockets of demand in refining and power generation as well shrinking supplies.
In addition to that, a number of refiners highlighted their ability to process additional high sulphur fuel oil, either directly into distillation units or into coking units, which could also tighten the market and provide a floor to HSFO crack values.
By contrast, surging demand for IMO-compliant fuels pushed the front-month 0.5% very low-sulphur fuel oil (VLSFO) crack to a record high premium of $26.12 a barrel against Brent crude on Tuesday, extending gains for a third straight session.
The January 180 cst crack is higher at -$ 20.25 / bbl with the visco spread at $ 2.10 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Middle Distillate cracks have recovered strongly with 4Q20 Jet close to $19.00 /bbl. We shall hedge a tranche there should levels cross $ 19.00 / bbl
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.