Crude Oil
Oil prices climbed nearly 2% to their highest in more than eight months on Wednesday.
Brents future rose 75 cents to settle at $48.61 a barrel. WTI January crude futures rose 80 cents to $45.71 per barrel.
Brent has moved into backwardation, a sign of increased prospective demand. Brent futures for February delivery traded as much as 14 cents above the January contract, the highest since July, before settling at an 8-cent premium.
OPEC and allies including Russia are leaning towards delaying next year’s planned increase in oil output to support the market during the second wave of COVID-19 and rising Libyan output, despite a rise in prices, three sources close to OPEC+ said.
India’s oil imports from the Middle East hit an 8-month high in Oct’20 of 2.7 MB/D (+27% MoM) after producers reduced OSPs while its purchases of African crude fell to a 3-month low of 439 KB/D (-39% MoM), data obtained from sources showed.
Crude oil processed by Indian refiners rose to its highest since Mar’20 in Oct’20 of 4.35 MB/D, operating at an average rate of 86.7%, compared to 86.2% in Sep’20. as fuel demand picked up although throughput remained lower YoY.
India’s IOC Paradip and CPCL Manali refineries are set to face a severe storm, tropical cyclone Nivar, with company officials saying 25 Nov’20 that they have put all precautionary measures in place.
US energy firms added 10 oil rigs in the week to 25 Nov’20 to total 241 (-430 YoY). Baker Hughes released the rig count a couple days ahead of usual due to the US Thanksgiving Day holiday on Thursday.
DOE data
In contrast with the API data, the DOE reported a small draw in crude oil stocks. Inventories at Cushing fell by 1.7 million barrels. The draw was largely due to an increase in run rates. As per our material balance statement, the crude draw seems to be a little more than reported.
Weekly gasoline demand dropped by about 129 kbpd to 8.13 million bpd, the lowest since June 2020. Distillate demand dropped as well, a bearish sign at this time of the year.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 1,425,914 (+12,007 DoD) yesterday. The daily death toll has risen to extremely high levels over the past few days. The total number of active cases rose by around 130,000 DoD to 17.26 million. (Click here for details).
Naphtha
Asia’s naphtha crack fell and reached an almost 6-month low of $42.78 a tonne on Wednesday due to an unyielding glut.
Supplies started to build around middle of October following high East-bound cargoes arriving in Asia. Cracker outages in South Korea added to the weakness. Cargoes from the Middle East were also seen increasing.
The December crack is lower at – $1.55 /bbl.
Gasoline
Asia’s gasoline crack rose for the second day to reach a nearly two-week high of $1.77 a barrel but this was still 28.6% lower versus a month ago.
Supplies have remained mostly ample as China’s exports have remained high.
The December crack is lower at $2.15 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s benchmark 10ppm diesel crack remained above $5 a barrel for the second day on Wednesday, lifted by firm crude oil prices.
Recent lower refinery runs in Asia had helped to curb supplies although Chinese exports have remained high.
China’s diesel exports in October, at 2.17 million tonnes, were more than 80% higher than September or October 2019. However, the country’s overall exports for the first 10 months of the year were 6.7% lower compared with January-October 2019.
Airlines are on course to lose a total $157 billion this year and next, their main global body warned on Tuesday, further downgrading its industry outlook in response to a second wave of coronavirus infections and shutdowns afflicting major markets. Jet fuel has been hit hard by a lack of air travel demand.
The December crack for 500 ppm Gasoil is lower at $4.30 /bbl with the 10 ppm crack at $ 5.10 / bbl. The regrade is at -$ 1.30 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO crack edged lower to a three-session low on Wednesday amid rising crude oil prices. The front-month VLSFO crack was at $10.22 per barrel against Dubai crude during Asian trading hours.
The December crack for 180 cst FO is lower at -$1.35 /bbl with the visco spread at $0.65 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity 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.