Oil prices tumbled anew on Wednesday after data showed a draw down of 3.2 million barrels last week from the U.S. Strategic Petroleum Reserve amid a fresh call by President Joe Biden on regulators to crackdown against “illegal” collusion behind high energy prices.
Brent crude futures finished the day down $2.15, or 2.6%, at $80.28 per barrel. It briefly fell below the key $80 mark, with a session low of $79.78. Week-to-date, Brent was down 2.52 on the week after losing 4% in three previous weeks.
WTI crude futures settled down $2.40, or almost 3%, at $78.96 per barrel. Week-to-date WTI was down 4%, after another losing 4% in three prior weeks.
The declines took Brent to its lowest close since Oct. 1 and U.S. crude to its lowest settlement since Oct. 7. Traders said funds apparently are weighing a greater likelihood that supply will start to outpace demand, with sharp declines in near-term futures pointing to funds closing long positions.
Cautions this week by the Paris-based International Energy Agency of higher global crude supply in the fourth quarter, and by European health authorities of another COVID-19 spike, added to the bearish mood in oil.
Worries about demand destruction also weighed as Europe has again become the epicentre of the COVID-19 pandemic, prompting some governments to consider reimposing lockdowns, while China is battling the spread of its biggest outbreak caused by the Delta variant.
While both crude and product stocks reported draws, the market chose to focus on a drop in SPR stocks, a sign that the US was serious about its intent to draw down stocks to cool down prices. In the last two weeks the U.S. Energy Department has sold more than 6 million barrels of oil – part of previously approved sales.
There are unconfirmed reports that the US President has requested China to co-ordinate releases from its SPR to enhance the effect.
There was also the heartening news that stocks in Cushing actually built by a modest 213 KB. Our material balance report suggests that crude stocks may have actually drawn a bit more than reported while product stocks actually built.
The gasoline and distillate product demand remains constant at a healthy 9.2 mbpd and 4.3 mbpd respectively, suggesting that the bullish phase may be far from over.
At a global level, the death toll from the COVID-19 virus rose to 5.14 Million (+8,399 DoD) yesterday. The total number of active cases rose by 110,000 DoD to 19.46 million. Yesterday’s figure was wrongly reported by the website. (Click here for details).
Asia’s naphtha crack climbed to $160.58 a tonne from $159.05 on the previous day.
The December crack is higher at $ 4.35 /bbl.
Asia’s gasoline crack rose to $11.11 a barrel from $10.95 in the previous session.
Light distillate stocks in Fujairah rose by 168 kb (3%) to 5.84 million barrels, in the week ended Nov. 15, data via S&P Global Platts showed.
The December crack is lower at $10.75 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for gasoil with 10 ppm sulphur content were at a premium of 60 cents per barrel to Singapore quotes, compared with 65 cents per barrel on Tuesday.
Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 2.8% to a two-week low of 3.6 million barrels in the week ended Nov. 15, data via S&P Global Platts showed.
Asia’s cash premiums for jet fuel dropped for a third straight session on Wednesday, weighed down by the absence of bids or trades in the physical market.
Cash differentials for jet fuel slipped to a premium of dropped to 7 cents per barrel to Singapore quotes, their lowest since Oct. 19. The differentials were at a 15-cent premium on Tuesday.
The front-month time spread for the aviation fuel in Singapore narrowed its backwardation by a cent on Wednesday to trade at 18 cents per barrel.
The December crack for 500 ppm Gasoil has lower at $11.10 /bbl with the 10 ppm crack at $ 12.40 /bbl. The regrade is at -$ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash premium climbed on Wednesday amid firming deal values in the Singapore trading window.
The cash premium climbed to $7.50 per tonne to Singapore quotes, up from $6 in the previous session. The cash differential hit a near two-year high of $8 a tonne on Friday.
The front-month VLSFO crack, however, slipped to a more than one-week low of $13.08 a barrel above Dubai crude, Refinitiv data showed, despite weaker crude oil prices.
Fujairah Oil Industry Zone inventories for heavy distillates and residues rose by 380,000 barrels, or about 60,000 tonnes, to 10.88 million barrels, or 1.71 million tonnes, data via S&P Global Platts showed. Fujairah’s fuel oil inventories were 33% higher than year-ago levels, the highest year-on-year gap since August 2020.
The December crack for 180 cst FO is higher at -$6.40 /bbl with the visco spread at $1.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No Fresh trades 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 refinery.
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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.