Crude Oil
Oil prices steadied on Friday as sluggish economic growth in China raised concerns over fuel demand and countered optimism from the signing of a China-U.S. trade deal. Brent crude futures rose 23 cents to settle at $64.85 a barrel. WTI crude futures rose 2 cents to settle at $58.54 a barrel.
For the week, Brent fell 0.2%, while WTI lost 0.8%.
Libyan state oil firm NOC has declared force majeure on oil exports from the eastern ports of Brega, Ras Lanuf, Hariga, Zueitina and Es Sider. The NOC said that forces loyal to Khalifa Haftar, who controls eastern Libya, had ordered the closure of the oil ports, which will result in loss of 800 kbpd in oil output.
Canadian oil producers and refiners have cut processing rates this week as extreme cold weather grips Western Canada, traders familiar with the matter said on Friday. Inventories are already at record highs due to a recent outage on the Keystone pipeline and a Canadian National rail strike.
China’s economy grew by 6.1% in 2019, its slowest expansion in 29 years. But surging Chinese demand, as seen in refinery throughput figures, helped offset the less positive economic growth data. In 2019 Chinese refineries processed 651.98 million tonnes of crude oil, equal to a record high 13.04 million barrels per day (bpd) and up 7.6% from 2018. Throughput also set a monthly record for December.
The U.S. oil rig count rose this week by 14 to 673. This rise come after four weeks of continuous declines.
Money managers cut their net long U.S. crude futures and options positions in the week to Jan. 14 by 64,018 contracts to 267,537, the U.S. CFTC said.
Naphtha
Asia’s naphtha crack recovered to a two-session high of $91.55 a tonne on Friday after the value fell from a one-month peak in mid-week following the shutdown of a Japanese cracker due to an outage.
Asahi Kasei Mitsubishi Chemical Ethylene Corp said on Friday that the 567 ktpa naphtha cracker in Mizushima, will resume operations on Jan. 24. The cracker was idled on Tuesday.
This came at a time when several Asian naphtha crackers had lowered throughput by 5-10% this month to combat weak petrochemical margins. The reduction in output would wipe out at least 300 KT of feedstock naphtha demand.
However, refinery maintenance in the Middle East could cut its February naphtha exports to Asia by 500 KT to about 1.8 million tonnes versus January.
For 2019. Japan imported nearly 13.56 million tonnes of naphtha, lowest yearly volumes since 2016, data from the Ministry of Economy, Trade and Industry showed.
The February crack is higher at – $ 3.00 / bbl.
Gasoline
Hengyuan Refining whose refinery is in Port Dickson, Malaysia, offered two 12,000-tonne catalytic cracker gasoline for sale through a tender closing on Jan. 20. The two cargoes are scheduled for Feb. 8-12 and Feb. 15-21 loading respectively.
Gasoline stocks in ARA rose by 92 kt to 1.12 million tonnes, the same level as two weeks ago.
The February crack is lower at 6.05/ bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil fell to 17 cents per barrel over Singapore quotes, compared with 27 cents a barrel on Thursday.
Cash premiums for jet fuel climbed to 19 cents a barrel over Singapore quotes, compared with 13 cents per barrel a day earlier.
The February/March spread for jet fuel in Singapore widened marginally on Friday to trade at a premium of 15 cents per barrel, 1 cent higher than Thursday.
Gasoil inventories in ARA were virtually unchanged at 2.58 million tonnes in the week ended 16 Jan.
The February crack for 500 ppm Gasoil is at $ 11.55 /bbl with the 10 ppm crack at $ 12.05 / bbl. The regrade is at -$ 0.00 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month crack for 0.5% VLSFO fell for the fourth straight session on Friday to its lowest since Dec. 6.
The front-month VLSFO crack dropped to $21.07 per barrel above Brent crude, compared with $23.92 a barrel in the previous session and down by $5.20 a barrel from the start of the week.
Global supplies of marine fuel compliant with new environmental rules are increasing fast as concerns over quality remain marginal, the International Energy Agency said on Thursday.
Residual fuel oil inventories in ARA fell by 27 KT to 1.18 million tonnes in the week to Jan. 16.
Despite initial concerns late last year about availability of very low-sulphur fuel oil, the preferred compliant marine fuel, supplies at key hubs now seem adequate, the global energy watchdog said in its monthly report. Around 7 to 8 million tonnes of VLSFO is estimated to be stored in tankers floating off Singapore, according to the report.
The February 180 cst crack is higher at -$ 12.95 / bbl with the visco spread at $ 2.00 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action for 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.
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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.