Crude Oil
Crude oil prices were uncertain as eyes returned to ground realities on Thursday.
Brent futures settled 2 cents higher at $56.10 a barrel. The March WTI future settled at $53.06 per barrel, down cents.
The outbreak of fresh Covid cases in China, as also the resistance to the stimulus package in the US and speed of adoption of the vaccine is making people look at these price levels with fresh scepticism. We believe that the major prop to prices is loose monetary and fiscal policy leaving too much money in the system.
Iraq has reduced annual supplies of Basra crude oil to several Indian refiners by up to 20% for 2021, industry sources said, in a rare move by OPEC’s second-largest producer which is trying to meet its obligations under the group’s production deal.
India’s crude oil processing last month registered its first YoY gain since Feb’20, rising 0.9% YoY to 21.02 MMT (~4.97 MB/D), driven by a surge in demand for fuels as economic activity continued to pick up from a coronavirus-induced slump.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 2,009,472 (+17,360 DoD) yesterday. The total number of active cases rose by around 140,000 DoD to 25.51 million. (Click here for details). The increase in the number of daily deaths is alarming.
Naphtha
Asia’s naphtha refining margin extended losses on Thursday, falling to a near-two week low of $102.98 a tonne and widening a gap from a 13-month high of $116.03 at the start of the week, amid signs of plentiful prompt Western arbitrage supplies that will help satisfy firm Asian demand for the light distillate, trade sources said.
Naphtha production in China climbed to 3.932 million tonne in December, up 11% from last year bringing total production of the fuel to 42.32 million tonnes n 2020 which was 6% higher from the pervious year, the data showed.
The February crack is higher at $1.85 /bbl.
Gasoline
Asia’s benchmark gasoline crack edged away from a near three-week low in the previous session after climbing 11 cents to $3.52 a barrel on Thursday.
Singapore’s light distillate inventories slipped 1% to 15.488 million barrels in the week to Jan. 20, according to Enterprise Singapore data. Compared to the same period last year, however, the light distillate inventories were 19% higher.
China produced a total of 131.717 million tonnes of gasoline in 2020, down 7% from the year before, the data shoed, as refiners scaled back production as the coronavirus pandemic hit demand.
The February crack is marginally higher at $4.55 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s jet fuel cash discounts widened on Thursday as traders were concerned that aviation demand would struggle as countries remain at different stages in terms of COVID-19 vaccination, which will delay resumption of international flights.
Cash differentials for jet fuel were at a discount of 24 cents per barrel to Singapore quotes, compared with a 18-cent discount a day earlier.
With vaccination drives underway, jet fuel demand might pick up slowly but it would be restricted only to essential travelling and would likely take up to the second half of this year for any substantial recovery, market watchers said.
Singapore’s middle distillate inventories rose 4.2% to a three-week high of 15.2 million barrels in the week to Jan. 20, according to Enterprise Singapore data.
The February crack for 500 ppm Gasoil is lower at $4.80 /bbl with the 10 ppm crack at $ 5.70 / bbl. The regrade is at -$ 1.05 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO cash premium climbed to a fresh 11-month high of $4.58 per tonne to Singapore quotes on Thursday, as demand for spot cargoes continued to lift the differential higher.
Singapore’s residual fuel oil inventories fell 1% in the week ended Jan. 20, despite a jump in weekly net import volumes that hit a four-month high, official data showed on Thursday.
The January crack for 180 cst FO is marginally higher at -$3.25 /bbl with the visco spread at $0.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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.