Oil prices edged up on Monday, reversing earlier losses, as investors shrugged off data that confirmed China’s economic growth is cooling and instead latched on to positive supply side drivers for the market. Brent crude oil futures were up 12 cents at $62.83 a barrel by 3:23 p.m. EST (1727 GMT) versus Friday’s settlement price, while U.S. crude futures were up 19 cents to $53.99 a barrel.
Global equities fell after data pointed to a slowdown in Chinese economic growth in 2018 to a 28 year low. The numbers fed concern that the outlook for global growth may be darkening, particularly given U.S. China trade tensions.
A separate report from China’s National Bureau of Statistics showed crude oil refinery throughput in 2018 climbed to a record 12.1 million barrels per day, up 6.8 percent from the previous year. China’s crude runs are likely to grow 4.7 percent in 2019 from last year to hit a record of 634 million tonnes, or 12.68 million bpd.
Asia’s naphtha crack was at a seven week low of $33 a tonne on Monday.
The markets continue to be battered by a persistent glut in supply that is likely to be only contained by run cuts rather than any demand growth picking up at this stage.
The February crack has sunk further to -$ 6.60 /bbl.
Asia’s gasoline crack was at a discount of $ 1.20 cents to Brent crude. This, like naphtha is a seven week low for the crack.
The February crack has fallen to $ 0.05 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash differentials for gasoil with 10ppm sulphur content narrowed to 43 cents a barrel to Singapore quotes on Monday from 44 cents on Friday.
Cash differentials for jet fuel were at a discount of $1.58 a barrel to Singapore quotes on Monday versus a discount of $1.57 on Friday. The differentials fell to their weakest in more than nine years last week.
The region’s jet fuel market has not seen the usual surge in seasonal demand due to a milder winter this year, which has curtailed consumption of heating kerosene. Temperatures in Tokyo will likely remain lower than normal at least for this week, according to weather forecast models, and this might help rekindle some buying interest for the heating fuel which is widely used in Japan. Beijing is forecast to remain warmer than usual for the coming two weeks while Seoul will experience a patch of colder temperatures but mostly remain warmer than normal for the next couple of weeks.
The February crack has jumped back to $ 13.20 /bbl with the 10 ppm crack at $14.15 /bbl. The regrade is steady at $ 1.00 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s front month time spread for 380 cst high sulphur fuel oil (HSFO) climbed to a five week high on Monday, lifted by expectation of an improvement in buying appetite after the Chinese Lunar New Year holidays in early February.
The Feb/March 380 cst time spread was trading at about $4.50 a tonne on Monday, up from $4.25 a tonne on Friday, and its highest since Dec. 14.
The February 180 cst crack has strengthened to $ 0.10 / bbl with the visco spread at $ 0.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
The Fuel Oil Cracks have strengthened with February once again flipping into positive territory. We would recommend hedging 2Q19 at the current level of -$1.20 / bbl
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.