Crude Oil
The Brent – WTI spread continued to widen as Brent settled marginally (18 cents) higher at $63.41 /bbl while WTI settled 14 cents lower at $57.16 / bbl.
The difference in the direction of settles underpins the major causes driving the respective markers. While the Brent future is primarily affected by the Forties shutdown, the WTI future reflects the growth in US production and also the general sentiment as regards shortage of crude supplies. As per the IEA, the market is expected to be oversupplied to the extent of 200 kbpd for the first half of 2018.
For now, the bullish sentiment on Brent is expected to be dampened as the Nigerian workers have called off their strike. Further, Saudi Arabia boosted production and exports in October according to JODI. Production ticked up to 10.06mbd from 9.97mbd in September, while exports increased to 6.87mbd compared to 6.55mbd in September.
However, the markets will await the realease of data by the API late this evening for a further sense of direction.
would also recommend the lightening of long positions and hedging them with puts.
Naphtha
Naphtha cracks went on easing. Asia’s naphtha crack for first-half February was at $112.45 a tonne on Monday, the lowest front-month crack value since Oct. 24. While there does appear to be demand for the material, the crack is slowly easing out.
The January Naphtha crack is marginally at $ 3.30 /bbl
Gasoline
Asia’s Gasoline crack, at $9.36 a barrel was at its lowest since July 14. With stocks at their highest levels for this time of the year and stocks burgeoning in the US as well, the outlook for the product crack remains weak.
In our Oil Price Digest of 01-Dec-17, we had recommended hedging the December crack at a value of $ 12.35 / bbl
The January crack however, is valued much higher at $ 11.20 /bbl.
Distillates
The Asian gasoil market was supported by spot demand from Vietnam, Pakistan and East Africa, ahead of a benchmark change by pricing agency Platts in Singapore and the Middle East.
Platts’ change in pricing methodology to reflect the underlying grade for its benchmark gasoil assessment to 10ppm from the current 500ppm kicked in on Monday as physical deals reflected January loading cargoes. But there was only one trade on Monday using December pricing.
The January gasoil crack too has risen and valued today at $ 13.85 / bbl. The regrade is unchanged at $ 0.75 /bbl
Fuel Oil
Cash premiums of Asia’s 180 cst high sulphur fuel oil jumped to a near three-month high on Monday, boosted by stronger buying interest and elevated deal values for the lower viscosity oil. Cash premiums for deals that were struck in the window ranged from 90 to 120 cents above Singapore quotes.
The 180 cst January crack is valued higher at -$ 3.15 /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