The markets ended the week appearing to get slowly resigned to the fact that ‘rebalancing’ isn’t going to be happening any time soon given the current stock levels and consumption of crude and products. Brent settled $ 1.03 lower at $ 51.96 / bbl. WTI contract settled below the psychological $ 50/ bbl level at $ 49.64 /bbl.
Almost all analysts seemed to have reached a consensus that the present level of production cuts, even if extended, are unlikely to make much of an impact on market supplies.
Most of them are saying that if prices are rising then OPEC needs to dramatically increase the volume of cuts.
We find this argument by analysts disturbing. Are we actually seeing a bunch of self appointed intellectuals exhorting a cartel to propel prices upwards? To what end?
In the meantime, Baker Hughes reported a rise in the number of rigs drilling for oil up to 688 (+5). This is the 14th straight week of rise of the number.
On the other hand, funds have increased net length in WTI contracts by close to 18,000 contracts to a total of 355,000 contracts. Once again, the significant part of the increase was attributed to a reduction in short positions of the order of 7,000 contracts.
The daily and weekly chart are full of bearish signals.
In the daily chart we have seen the MACD cross over and move into negative territory, a phenomenon that is clearly bearish. Prices broke through the 50 DMA and 100 DMA levels as if they did not exist and are now approaching the 200 DMA which rests at around $ 51.25. On the previous occasion, this level had proved a support. Support would also seem to be coming from a trend line from the recent big low at $ 43.41.
The weekly chart had had the MACD in negative territory. However, the CCI plummeted from slightly overbought territory to majorly oversold territory in the past week.
Supports lie at current levels from a longer term trend line from the Jan 2016 low, then 51.45 from the shorter term trend line and 51.25 from the 200 DMA. Resistances lie at 52.70, then the 50 DMA around $ 54 /bbl and 100 DMA at 54.65
The demand for Naphtha has been strong and consistent. This demand has raised the crack levels of naphtha back to levels seen on Thursday. The Japan Naphtha Dubai May is around – $ 0.1 /bbl. Singapore Naphtha – Dubai crack is at -$1.7 for May
Gasoline cracks cracks eased marginally today. The May crack is valued at $ 12.30 /bbl today. The May-June spread is valued at 45 cents / bbl.
Gasoil cracks have started the week marginally firmer than Friday. The May crack is valued at $11.85/bbl. The regrade however slipped to -$ 0.30 /bbl for May.
180 CST Fuel Oil
Fuel Oil remained firm notwithstanding the build in Singapore stocks. ARA stocks continued to draw, ostensibly for export to the east. However, the rise in dirty tanker freights suggests that the East West arbitrage may not be as easy as the numbers may suggest.
The value of the May crack is -$ 3.55 / 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