Crude Oil
Oil prices were slightly lower on Thursday as the market awaited future directonal signals. Brent crude fell 14 cents to settle at $61.18 a barrel. U.S. crude futures settled 24 cents lower at $52.07 a barrel..
U.S. Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30, the Wall Street Journal reported on Thursday, citing people familiar with the internal deliberations.
The markets are buoyed this morning by the above report. Brent is trading at around $ 61.70 at the time of writing.
OPEC, in its monthly market report, cut its forecast for average daily demand for its crude in 2019 to 30.83 million barrels, down 910 kbpd from the 2018 average. However, OPEC also said it cut oil output by 751 kbpd in December before a new accord to limit supply took effect, suggesting that producers have made a strong start to averting a glut in 2019. The group and its allies plan to meet on April 17-18 in Vienna to review the supply reduction deal that began in January.
Japan’s annual core consumer inflation slowed to a seven-month low in December as soft household spending kept firms from raising prices, a further sign of the growing challenge faced by the central bank in achieving its elusive 2 percent target.
Naphtha
Asia’s naphtha crack eased from a two week high to a four session low of $41.48 a tonne on Thursday.
Japan imported 1.31 million tonnes of naphtha in December, highest monthly volume since January 2018. This also brought Japan’s naphtha imports for 2018 to a total of 13.86 million tonnes, down 2.6 percent from a total of 14.23 million tonnes in 2017, as heavier maintenance last year could have weighed on imports.
Kuwait’s Port Authority has temporarily halted shipping at the Shuwaikh, Doha and Shuaiba ports because of bad weather, but oil ports were unaffected.
The February crack has dropped to -$ 5.50 /bbl.
Gasoline
Asia’s gasoline crack slumped to its lowest in about a month to a discount of 67 cents per barrel to Brent crude price due to a persisting glut. But dramatic run cuts at refineries are unlikely despite new mega refineries coming up this year in Malaysia and China.
Possible heavy refinery turnaround in the first half of 2019 combined with higher summer demand could help soak up some of the product surplus. South Korea’s GS Caltex is expected to shut an 180,000 barrels per day (bpd) crude unit from May 1 to early June and a gasoline making unit from late April for about two months among other units scheduled for planned maintenance.
Light Distillate Stocks in Singapore dropped marginally by 35 KB to 15.39 million barrels. Stocks are still at extremely high levels and around 14% higher than last year.
The February crack has risen to $ 0.70 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for gasoil with 10ppm sulphur content were at a discount of 45 cents a barrel to Singapore quotes, the biggest discounts since Jan. 9. They were at a discount of 40 cents a barrel on Wednesday.
Singapore onshore middle distillates stocks soared to a 16 month high of 12.6 million barrels in the week to Jan. 16 following two weeks of consecutive drawdown.
The December export volumes coming out of India and China, two key players in the region, have added to the existing supply, while demand has been weak. But, the overall middle distillate market would likely strengthen once the spring refinery maintenance season begins in March.
India’s diesel exports have been relatively steady, thanks to available supplies, despite strong domestic demand in the country. Diesel sales in India rose 6.5 percent to 7.37 million tonnes in December as against November.
Cash differentials for jet fuel widened their discounts to $1.60 a barrel to Singapore quotes, a fresh low in more than nine years.
The February crack has dropped to $ 13.40 /bbl with the 10 ppm crack at $14.35 /bbl. The regrade has improved to $ 1.10 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Cash premiums for 380 cst high sulphur fuel oil (HSFO) rose to a two week high on Thursday due to higher deal values in the Singapore trading window, but overall activity remained muted ahead of the Chinese Lunar New Year in February.
The 380 cst fuel oil cash premiums rose to $3.93 a tonne to Singapore quotes, from $3.75 a tonne in the previous session. This was the highest since Jan. 3.
Singapore fuel oil inventories continued to report weekly declines after having reached a multi month high in mid-December. Onshore fuel oil stocks fell 537 KB from the previous week to 18.40 million barrels
Singapore fuel oil stocks have declined steadily over the past four weeks after hitting a near seven month high in the week to Dec. 19 at 20.813 million barrels, or 3.106 million tonnes. Singapore fuel oil inventories are now 8 percent lower than a year earlier.
The February 180 cst crack has dropped to -$ 1.00 / bbl with the visco spread at $ 0.35 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Nothing fresh to consider hedging to today.
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.