Oil prices rose on Wednesday, recovering somewhat from a sharp selloff during the previous session, after U.S. data showed strong demand for refined products. Brent crude futures rose 98 cents to settle at $57.24 a barrel, a 1.74 percent gain. U.S. crude gained 96 cents to settle at $47.20 a barrel.
The market drew heart from diesel demand numbers which are the highest since January 2003. Nevertheles, sentiment remained negative as investors grappled with weakening demand and worries about oversupply. All three major producers are producing at near record levels. While the OPEC cuts are set to come in January, Russia is not about to do anything soon.
The DOE reported a small draw in crude stocks, which was less than expected. Stocks are currently higher than the previous years levels.
While refinery run rates dropped marginally, it is surprising to note that distillate production dropped more than gasoline.
Both gasoline and distillates recorded a healthy rise in demand with the distillate demand at a record high. Gasoline stocks continue to hover around seasonal highs whereas distillate stocks are gravitating towards seasonal lows.
Asia’s naphtha crack edged up for a second day, this time by 15 cents, to reach a three-session high of $49.63 a tonne on Wednesday on good demand, although supplies were still in excess.
The January crack is higher at -$ 2.60 /bbl
No fresh news on gasoline markets. Light distillate stocks at Fujairah dropped by 1.4 million barrels to 9.31 million barrels.
The January crack is lower at $ 2.25 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for 10ppm gasoil widened to 78 cents a barrel to Singapore quotes, compared with a 55 cent discount per barrel on Tuesday.
The January/February spread for 10ppm gasoil widened its contango structure by 4 cents on Wednesday, and stood at a discount of 70 cents a barrel.
With the East-West arbitrage now shut, the market is going to have to grapple with excess stocks. Currently for the arbitrage to work, the East West EFS needs to be around – $ 20/MT. It is currently at -$17 /MT.
Middle Distillate stocks in Fujairah increased by 120 KB to 1.64 million barrels.
Cash discounts for jet fuel widened to $1.20 a barrel to Singapore quotes, compared with a discount of $1 a barrel on Tuesday.
The January crack is higher at $ 14.00 /bbl with the 10 ppm crack at $ 14.95 /bbl. The regrade is steady at $ 2.35 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Ample near-term stocks of fuel oil continued to weigh on market sentiment with front month 380-cst time-spreads, cracks and cash premiums extending losses on Wednesday.
The Jan/Feb 380-cst time-spread slipped to about $1.50 a tonne on Wednesday from about $1.75 a tonne in the previous session. The front-month time-spread last hit this level in April.
The January 380-cst barge crack against Brent crude edged lower to about minus $8.50 a barrel on Wednesday, from about minus $8.25 a barrel in the previous session.
Cash premiums of 380-cst fuel oil fell to their lowest since June at $2.98 a tonne to Singapore quotes on Wednesday, down from $3.65 a tonne in the previous session.
Fuel oil stocks in Fujairah decreased marginally by 15 KB to 6.47 million barrels.
The January 180 cst crack is higher -$ 1.90 / bbl with the visco spread blowing out to $ 0.65 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Nothing Fresh to Report
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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.