Crude Oil
Oil prices firmed by about 1% on Wednesday on hopes OPEC and its allies will delay a planned increase in oil output.
Brents future rose 59 cents to settle at $44.34 a barrel. WTI crude futures rose 39 cents to $41.82 per barrel.
The OPEC+ group had met on Tuesday to discuss the ongoing situation but made no formal recommendation on adjustments to their agreement on output cuts.
Saudi Arabia’s crude oil exports rose for a third straight month to 6.07 MB/D in Sep’20, from 5.97 MB/D in Aug’20, official data showed on Wednesday. The country’s crude output was at 8.98 MB/D in Sep’20.
China’s total output of six major oil products,LPG, naphtha, gasoline, jet/kerosene, gasoil and fuel oil, fell 4.8% YoY to 39.39 MMT in Oct’20, while its Jan-Oct’20 output across the six products was 2.9% lower YoY at 374.30 MMT, according to NBS data.
China’s commercial oil stockpiling sector, which emerged as a key swing buyer of crude as prices plunged earlier this year, is setting plans to grow again in 2021, supporting a further boost in imports.
doe data
In the United States, crude inventories rose slightly last week facilitated, in part, by a hike in production. DThe build was due in part to a 400,000-barrel hike in production to 10.9 million bpd last week.
Gasoline stocks rose largely due to a drop in demand of over 500 kbpd. While distillate stockpiles fell by 5.2 million barrels, this seems to be at odds with our material balance statement.
The increase in distillate demand seems to have been adequately met by increase in both imports as well as production. Hence the large draw is a bit puzzling.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 1,354,093 (+10,977 DoD) yesterday. This is the highest number of daily deaths recorded. The total number of active cases rose by around 210,000 DoD to 15.85 million. (Click here for details).
Naphtha
Asia’s naphtha crack rose for the third straight session on Wednesday to reach a 1-1/2 week high of $59.38 a tonne as spot and recent term demand temporarily countered the supply glut.
Japan imported 1.29 million tonnes of naphtha in October. The October imports were 36% higher versus a year ago.
Lower refinery runs this year due to the pandemic but firm petrochemicals demand has boosted import volume.
The December crack is higher at – $0.10 /bbl.
Gasoline
No fresh news on the Asian gasoline markets.
Britain will ban the sale of new petrol and diesel cars and vans from 2030, five years earlier than previously planned, as part of what Prime Minister Boris Johnson is casting as a “green revolution” to cut emissions to net zero by 2050.
This came in the same week where the Canadian province of Quebec had said on Monday it will ban the sale of new gasoline-powered passenger cars from 2035, joining California and others in announcing moves to shift to electric vehicles and reduce greenhouse gas emissions.
The December crack is lower at $1.85 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel were at 48 cents a barrel to Singapore quotes, compared with a 50-cent discount on Tuesday.
Asian refining margins for jet fuel edged higher on Wednesday, but aviation demand remained subdued with a majority of international travel restrictions still in place.
Cracks, for jet fuel rose to $2.95 per barrel over Dubai crude during Asian trading hours, 35 cents higher than a day earlier. The cracks for the aviation fuel, which have slumped 18.7% in the last week, continue to be at their weakest seasonal levels on record.
Middle-distillate inventories in the Fujairah Oil Industry Zone rose 11.3% to 5.96 million barrels in the week ended Nov. 16, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged about 4 million barrels so far in 2020, compared with the weekly average of 2.4 million barrels in 2019.
The December crack for 500 ppm Gasoil is higher at $4.30 /bbl with the 10 ppm crack at $ 4.10 / bbl. The regrade is at -$ 1.35 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s cash premiums for 380-cst HSFO rose for a fourth consecutive session on Wednesday, surging to their highest in more than nine months on firmer demand.
The cash premium for 380-cst HSFO climbed to $7.58 per tonne to Singapore quotes, a level not seen since Feb. 7. It was at a premium of $7.25 per tonne a day earlier.
The 380-cst HSFO barge crack for December was at a discount of $4.48 a barrel to Brent, compared with minus $4.59 a barrel on Tuesday.
The front-month VLSFO crack climbed to $10.97 per barrel against Dubai crude during Asian trading hours on Wednesday, up from Tuesday’s $10.18 per barrel.
Cash premium for Asia’s 0.5% VLSFO was at $2.10 a tonne to Singapore quotes, compared with $2.23 per tonne on Tuesday.
Fujairah inventories for heavy distillates and residues dropped 8.7%, or 775 kb from the previous week to 8.2 million barrels, data via S&P Global Platts showed. Compared with year-ago levels, the weekly fuel oil inventories at FOIZ were 47% lower. Fuel oil stocks at FOIZ have averaged 13.3 million barrels so far in 2020, compared with a weekly average of 10.8 million barrels in 2019.
The December crack for 180 cst FO is higher at +$0.05 /bbl with the visco spread at $0.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity 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.
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.