23 Jan 2017
oil-barrel

Crude Oil

Crude Oil ended the week on a bullish note ahead of the OPEC meeting to monitor efficacy of the production cut. Brent settled at $ 55.49/bbl, a gain of $ 1.33.  WTI gained $1.05 to settle at $ 52.42 / bbl

 

Saudi officials maintained that production cuts of 1.5 million barrel have already been made, a claim they have been stoutly making since the beginning of the year.  Their repeated insistence is causing a jarring note in our ears.

Hedge funds increased their long positions with gross long positions at the highest level since 2006.  While this is an indication of the market belief, it also shows the inability of such long positions to take the market soaring.  If at all a critical resistance level is breached, oil prices may really zoom.

On the other side, Libya’s production has increased to 722 kbd.  The Baker Hughes rig count showed an increase of 29 rigs deployed.  This factor will always be a damper on prices racing away due to short supply.

Naphtha 

Tight supplies continue to be supportive for the naphtha crack.  The Naphtha crack for February is now valued at $2.10 / bbl and March at $ 1.30 / bbl.

We would reiterate our recommendation to refiners to hedge March Naphtha in particular

Gasoline 

Gasoline also rose in sympathy with Naphtha.  The February crack is valued at $ 13.3 cents /bbl.

On the physical side, Trafigura seems to be a strong buyer for the month of February with Vitol seeming to be a regular seller.

Middle Distillates

The cash markets saw the UAE import around 40 KT of Jet and 25 KT gasoil last week.  This is an unusual event as the UAE is normally an exporter of both fuels.

The gasoil crack firmed up marginally in the face of strong stock builds in both Asia and the ARA region.  February valued at $11.50 /bbl. The Regrade was valued at $ 0.40 /bbl.

Market players who have sold the regrade at levels ranging from $1.30 / bbl to $ 2.00 /bbl (as advised by us) would have a lot to cheer about.

Fuel Oil

Supply fears seem to have receded further into the background. The February crack was valued at close to  -$2.30 /bbl and the March crack slightly lower at -$ 2.75 /bbl

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.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

 

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