Oil prices gave up almost all of yesterday’s gains as markets began absorbing the impact of global oversupply. Brent crude futures lost 96 cents to settle at $63.52 a barrel. WTI crude futures fell 78 cents to settle at $53.85 a barrel.
Trading was thin due to Thursday’s Thanksgiving holiday in the United States.
Iran’s exports have dropped by several hundred thousand barrels per day this month, suggesting U.S. sanctions that kicked in this month have scared off many buyers.
OPEC’s biggest exporter Saudi Arabia is under U.S. pressure not to take any action on cutting output that would push prices higher again.
More U.S. crude could be heading to market as U.S. pipeline bottlenecks are cleared in the second half of 2019.
Rising U.S. oil output has outpaced capacity to transport the extra crude. To counter the surge in supply, OPEC is considering a deal to cut production when it meets on Dec. 6, although OPEC member Iran is expected to resist any voluntary reduction. Russia, an ally of OPEC, has also shown no sign it would join any cut..
Asia’s naphtha crack fell to a five session low of $25.02 a tonne, weighed down by continued concerns of ample supplies.
The December crack has dropped to -$ 5.80 /bbl
The Singapore 92 RON gasoline crack against Brent crude slipped to $0.87 a barrel, down from a near-three week high of $1.64 in the previous session. Singapore inventories of light distillates climbed to a total of 13.444 million barrels in the week to Nov. 21, up by 483 KB from the week before.
The December crack has dropped to $ 2.40 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash discounts for 10ppm gasoil were at 17 cents a barrel to Singapore quotes on Thursday, compared with a discount of 14 cents a barrel on Wednesday.
Cash differentials for jet fuel widened their discounts to 68 cents a barrel to Singapore quotes on Thursday, compared with a discount of 66 cents a barrel on Wednesday. These are the lowest levels in over a month, hurt by muted buying interests and as middle distillate inventories in Singapore rose to their highest in more than two months.
Seasonal demand for kerosene has not yet picked up though it is November already, while supplies are ample as quite a few regional refiners have returned from planned maintenance outages. Some traders are concerned this year’s heating demand for kerosene might be lacklustre due to the likelihood of warmer winter temperatures. Japan is expected to experience average-to-warmer weather between December and February, the country’s official forecaster said on Wednesday. Over the next few weeks, through to the end of this year, temperature levels are expected to be near or above normal levels in Tokyo and Beijing, while below normal in Seoul.
Singapore onshore middle-distillate stocks rose by about 13 percent to 11.1 million barrels in the week to Nov. 21. The increase of 1.26 million barrels in middle distillate inventories was the highest weekly build since the week to Aug. 29.
The December crack has improved to $ 15.30 /bbl with the 10 ppm crack at $ 16.25 /bbl. The regrade has eased to $ 2.50 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Cash premiums for Asia’s mainstay 380-cst high-sulphur fuel oil slipped to a near one-month low on Thursday, as rising supplies helped ease concerns of tight availability of finished grades of the fuel.
However, further downside risk would be limited due to a tighter supply outlook in December amid expectations of lower arbitrage volumes on the last month of the year.
Premiums for 380-cst cargoes slipped to $7.82 a tonne to Singapore quotes on Thursday, from $8.33 in the previous session, and their lowest since Oct. 25.
Singapore fuel oil inventories jumped 13 percent to a four-week high in the week ended Nov. 21. The higher inventory levels were in line with market expectations of increased arbitrage flows into Singapore in November, compared with the previous month, with more volumes due for arrival in the second half of the month. Onshore fuel oil inventories jumped 2.082 million barrels to 17.90 million barrels in the week to Nov. 21.
The December 180 cst crack has improved to +$ 4.30 / bbl with the visco spread at $ 0.70 /bbl
Click Here for a graphical depiction of Fuel Oil stocks by region.
The middle distillate cracks being so high despite a stock build in Singapore and availability of material at discounts to markers seems to be a function of the East west arb. We would expect to see them ease shortly.
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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.