Crude Oil
Crude futures rose ahead of settlement in choppy trade on Monday, supported by a reported drawdown of U.S. oil inventories, potential European Union sanctions on Iran and possible OPEC production cuts. Brent crude settled up 3 cents at $66.79 a barrel. WTI crude futures settled 30 cents higher at $56.98 a barrel.
The market pared losses early in the U.S. trading day when energy information provider Genscape reported that crude inventories fell in the latest week. It then strengthened further into the close.
EU foreign ministers endorsed a French government decision to sanction Iranian nationals accused of a bomb plot in France, diplomats said. That could take additional oil off the market from OPEC member Iran.
Naphtha
Asia’s naphtha crack rose for the fifth straight session on Monday, to reach a near 2-1/2 week high of $41.08 a tonne, supported by last week’s strong demand. Cargoes were still ample, although the number of Western shipments arriving in Asia in January appeared to be slowing down versus cargoes booked for December arrival.
The December crack is steady at -$ 4.75 /bbl
Gasoline
No fresh news on the gasoline market today.
The December crack is lower at 2.55 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for 10ppm gasoil flipped to a discount of 5 cents a barrel on Monday as compared to a premium of 3 cents a barrel on Friday.
Cash differentials for jet fuel also weakened as the front-month spread turned back into contango. They were two cents lower on Monday at a discount of 21 cents a barrel to Singapore quotes.
The December crack is lower at $ 16.45 /bbl with the 10 ppm crack at $ 17.40 /bbl. The regrade is at $ 2.05 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The fuel oil market began the week on a stronger note as a tighter supply outlook for December helped boost sentiment. The December 380-cst barge fuel oil crack to Brent crude was trading at about minus $5.30 a barrel on Monday, compared with a discount of $5.50 a barrel in the previous session. The front-month crack discount was last narrower on Wednesday when it reached a 14-month high of minus $5.25 a barrel.
Similarly, the December East-West 380-cst fuel oil arbitrage spread climbed to about $40.75 from $39.50.
The December 180 cst crack is higher at +$ 4.25 / bbl with the visco spread at $ 0.80 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The strength in Fuel Oil cracks has taken the 1Q19 crack to 1.45 /bbl. We shall lay on one more hedge here in keeping with a disciplined hedging approach. The regrade for December 18 has also crossed 2.00 which is also extremely rarely seen. We shall therefore add a position there as well.
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.
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.