Crude Oil prices fell on Friday to their lowest since the third quarter of 2017 as global oversupply kept buyers away from the market ahead of holidays over the next two weeks. Brent crude futures fell 53 cents to settle at $53.82 a barrel. WTI crude futures fell 29 to settle at $45.59 a barrel.
Both contracts fell more than 11 percent in the week.
Since reaching multi-year highs at the beginning of October, both crude oil benchmarks have lost more than a third of their value in their steepest decline for three years. With just about one week to the end of 2018, WTI remains down about 25% this year, while Brent is down about 20% on the year.
U.S. energy companies added oil rigs for the first time in the past three weeks. Drillers added 10 oil rigs in the week to Dec. 21, bringing the total count to 883. . This was the biggest gain in rigs since early November.
Asia’s naphtha crack rose for a fourth straight session on Friday to $61.05 a tonne, its highest since Oct. 31, as persistent strong demand soaked up most of the excess supplies. Several buyers from across Taiwan, South Korea, Japan and Malaysia started purchasing spot cargoes for first-half February this week.
The January crack is slightly lower at -$ 2.10 /bbl
Asia’s gasoline crack ended the week at a discount of 16 cents a barrel versus a discount of 40 cents a barrel on Thursday, but supplies across most regions remained aplenty.
Gasoline stocks held in ARA surged nearly 11.6 percent by 110 KT to a 10-week high of about 1.1 million tonnes in the week to Thursday.
The January crack is higher at $ 2.50 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for 10ppm gasoil weakened on Friday to their widest discounts for 2018, hurt by increasing inventories across regions on the back of lacklustre buying interest.
Cash discounts for gasoil with 10ppm sulphur content were at 95 cents a barrel to Singapore quotes on Friday as compared to a discount of 90 cents a barrel on Thursday.
Gasoil inventories in ARA rose for the first time in 10 weeks to 2.08 million tonnes. Stocks are marginally above last year’s levels.
Some gasoil volumes are going towards the West but the arbitrage window is getting narrow, and freight rates are also very high, which might hinder arb flows as well. The gasoil EFS was around minus $17 per tonne on Friday, which makes movement of cargoes to the west challenging to say the least. The EFS needs to be minus $20 a tonne or below to make the arbitrage shipments profitable at current tanker rates.
Cash discounts for jet fuel widened by two cents to $1.20 a barrel to Singapore quotes on Friday.
The January crack is lower at $ 13.40 /bbl with the 10 ppm crack at $ 14.35 /bbl. The regrade is steady at $ 2.45 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Asia’s fuel oil market extended gains on Friday after steady declines since the start of the month. The gains, however, came amid thin trade liquidity ahead of the year-end holidays.
The Jan/Feb 380-cst time-spread was trading at about $3.50 a tonne on Friday from about $3.25 a tonne in the previous session.
The front-month time-spread on Wednesday was at its lowest level since April at $1.50 per tonne.
The January 380-cst barge crack against Brent crude was trading at about minus $6.95 a barrel on Friday, from about minus $7.20 a barrel in the previous session. Tumbling crude oil prices contributed to the narrower crack discount..
ARA Fuel Oil stocks rose for the fourth consecutive week to 1.44 million tonnes, an increase of 132 KT. ARA stocks are now at seasonal highs and it should not be long before some of these stocks move to Singapore.
The January 180 cst crack has jumped to -$ 0.45 / bbl with the visco spread at $ 0.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Fuel oil cracks have once again strengthened. However, we are now seeing stocks at significantly higher levels than before. We would therefore initiate a hedge for the January, February and March cracks at -0.45,-0.95 and -1.40 respectively. While we could do it for 1Q19, there is not much point in splitting the trade later.
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 refiner.
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.