With no negative news to pull the market down today, the bulls finally got the bit between their teeth and sent the crude markets screaming to new highs in much the same manner that they had in early to mid October this year.
Brent settled at $ 48.90 / bbl up by over $2 /bbl. WTI settled at $ 47.49 / bbl
Markets are continuing their climb early this morning. How high this goes is dependent on the following factors
- Stock data being released tonight and tomorrowA further build could apply brakes on the rise whereas a draw would add fuel to the fire (pun intended)
- What actually emerges from the 30th November meetingWe expect to see some profit taking even if there is actually something positive in the nature of production freezes or cuts.
- What we see in terms of supplies in December.The record of adhering to production quotas they have agreed to has been abysmal and there is no reason to particularly believe that they will turn over a new leaf. Having said that, the market has no choice ot believe this right now because if they don’t, they won’t see any hope for prices.
The Naphtha market eased in the prompt. Traders see the market showing some strength in demand as people believe the excess supply may be less than the demand. However, the forward market eased out considerably with the December crack down by 60 cents to around $ 1.40 /bbl .
Gasoline prices are still holding with the December crack just below $11 / bbl.
The distillate market began picking up today as demand for both gasoil and jet was seen in the expectation of the winter.
The gasoil crack for December rose to close to $ 11.95 /bbl.
Jet crack values also picked up with the regrade for December having risen to as high as $ 1.30 /bbl.
With a better realignment of price curves though, the regrade in January softened marginally $ 1.35 /bbl
The fuel oil crack on Monday appears to be largely unchanged from Friday with December showing a value of -$ 1.38 /bbl.
However, beyond December the market appears to be a bit wary, poised to move either way depending on developments.
Fundamentally, we expect supplies in the future to be much less than in previous years thanks to destruction of fuel oil producing units as well as reduced supplies out of Venezuela.
What remains to be seen is whether the current levels are the new base for fuel oil. We are inclined to suggest that the market will drift lower in time.
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.