Crude Oil
Crude oil prices recovered on as markets rediscovered optimism at the start of a new week.
Brent futures settled 47 cents higher at $55.48 a barrel. WTIs future settled at $52.27 per barrel, down 86 cents.
For the week, Brent actually gained 31 cents or 0.6% while WTI lost 0.2%.
The DOE data on Friday reported a build of 4.35 million barrels. While this was against the market expectations of a 1.7 million barrel draw, we have to say we were not surprised as the draws in the past few weeks appeared exaggerated. Contributing to the build also was a slump in exports to the tune of 750 kbpd.
On the fuel products front, gasoline registered a draw of just over a quarter million barrels versus an expected build of 2.8 million. That came after a total build of 9 million barrels over the previous two weeks. For diesel-led distillates, the build was less than half a million barrels versus expectations of a rise of 1.2 million. Distillate inventories have risen 14.5 million barrels over four weeks now
Iran’s oil exports have climbed in recent months and its sales of petroleum products to foreign buyers reached record highs despite US sanctions, the oil minister said on Friday, saying Iran’s crude exports had recently averaged 900 KB/D.
Crude exports of Nigeria’s key crude Qua Iboe are set to resume for the first time in almost six weeks after a fire at the terminal halted production and loadings, with production ramping up to normal levels of 200 KB/D in the past week.
Production resumed at Libya’s Waha Oil after the completion of repairs at a main pipeline that links fields it operates to the export terminal of Es Sider. NOC on 16 Jan’21 said the country’s crude output would fall by 200 KB/D because of the repairs.
US energy firms added 2 oil rigs in the week to 12 Jan’21 to total 289 (-387 YoY), amid higher energy prices over the past few months.
Money managers raised their net long US crude futures and options positions by 7,348 contracts to total 357,312 in the week to 19 Jan’21, the US CFTC said on Friday.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 2,138,345 (+9,511 DoD) yesterday. The total number of active cases rose by around 450,000 DoD to 25.89 million over the weekend. (Click here for details).
Naphtha
Asia’s naphtha refining margin extended losses for a fifth straight session on Friday, falling to a more than two-week low of $97.85 a tonne.
A surge in demand that drew on naphtha supplies had recently sent the naphtha market soaring, pushing its crack value to a 13-month high of $116.03 at the start of the week.
But fresh Western arbitrage supplies and cooling demand due to deteriorating refining economics have weighed on the market this week, trade sources said.
The February crack is higher at $1.80 /bbl.
Gasoline
Asia’s benchmark gasoline crack extended gains, climbing 16 cents to $3.68 a barrel on Friday.
While reduced refinery output have provided some support, concerns over demand for transportation fuels have weighed on gasoline markets recently, as many countries imposed a fresh round of lockdowns to curb the spread of the COVID-19 pandemic.
China produced a total of 131.717 million tonnes of gasoline in 2020, down 7% from the year before, the data shoed, as refiners scaled back production as the coronavirus pandemic hit demand.
The February crack is lower at $4.55 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian jet fuel refining margins dropped for a fourth consecutive session on Friday, posting their biggest weekly decline in three months, as renewed COVID-19 restrictions rattle the airline industry with number of operating flights decreasing globally.
Cash differentials for jet fuel widened to a discount of 26 cents per barrel to Singapore quotes on Friday, compared with a 24-cent discount a day earlie.
Fresh coronavirus cases in China threatens fuel demand recovery and the jet fuel market is expected to be badly hit, market watchers said. Beijing is urging people not to travel during the upcoming Lunar New Year holidays.
With vaccination drives underway, jet fuel demand might pick up slowly but it would be restricted only to essential travelling and would likely take up to the second half of this year for any substantial recovery, market watchers said.
Singapore’s middle distillate inventories rose 4.2% to a three-week high of 15.2 million barrels in the week to Jan. 20, according to Enterprise Singapore data.
The February crack for 500 ppm Gasoil is higher at $4.65 /bbl with the 10 ppm crack at $ 5.50 / bbl. The regrade is at -$ 1.45 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
No fresh news.
The January crack for 180 cst FO is steady higher at -$3.20 /bbl with the visco spread at $0.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action today
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 refinery.
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.