Oil Price Digest 24-Oct-16
We unfortunately could not publish this daily blog for a few days as the author was traveling. We resume today
Crude Oil
Oil ended Friday slightly higher amid speculation that OPEC and Russia will be able to control production but tempered by a double digit rise in count of rigs being deployed in the US.
Brent ended the day 41 cents higher at $ 51.78. For the week though it was flat. WTI settled at $ 50.85 on Friday, marginally higher than the previous day. WTI gained 1% in the previous week though.
The market appears to be in an uncertain frame of mind. Previous experience makes it hard to lend credibility to discipline in production quotas, but if caught on the wrong foot, it could be horrendously expensive. The concept being touted here is “Be long or be wrong”
Naphtha
The Naphtha crack is at its firmest in a long long time with an early morning indication of almost flat to Dubai. While discounts in the physical still point to plentiful supplies, it is fairly clear that the supply situation has eased significantly.
Gasoline
The gasoline crack too has firmed up to a level of $ 11.5 /bbl. While gasoline stocks in Asia rose marginally, stocks in both, the US as well as ARA declined. In all three hubs, stock levels are about 20% lower than the previous year
Middle Distillates
The gasoil crack edged up higher in the face of anticipated strong demand from Europe for the winter. As a caution though, China exported record volumes of gasoil in the month of September.
While the regrade appears to continue to fade, jet could be boosted by additional demand arising out of India. India’s aviation ministry has stated that plans to boost flight to semi urban destinations could kick off as early as January 2017.
Fuel Oil
Fuel Oil continued to strengthen in Asia fueled by refinery turnarounds and drop in crude prices in addition to continued demand for the product. Over the week the fuel oil crack has strengthened by 75 – 80 cents to quote around -$ 3.50 / bbl currently.
Fuel stocks in the ARA rose by nearly 24% to 122,000 tonnes. This could lead to a future softening of the crack.
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.