Crude Oil
Oil surged on Wednesday, posting its strongest daily gain in more than two years in a partial rebound from steep losses that pushed crude benchmarks to lows not seen since 2017. Brent crude futures rose $4.00 to settle at $54.47 a barrel. U.S. crude futures settled at $46.22 a up, down $3.69.
Both marker crudes rose by over 8%. This was their largest one-day increase since Nov. 30, 2016, when OPEC signed a landmark agreement to cut production.
Naphtha
Asia’s naphtha crack rose for the fifth straight session to reach a near two-month high of $61.18 a tonne following a string of purchasers appearing in the market.
Taiwan’s Formosa, Titan, KPIC, YNCC, Idemitsu and Lotte Chem had snapped up more than 250,000 tonnes of the fuel for first-half February delivery. Taiwan’s CPC was still looking to buy full-range and heavy naphtha for Feb. 5-26 arrival at Kaohsiung through a tender closing on Dec. 28.
The January crack has however weakened to -$ 2.15 /bbl
Gasoline
Asia’s gasoline crack flipped to a premium of $1.19 a barrel on Wednesday to reach its highest in slightly over a month following a sharp drop in Brent oil prices. Asia’s gasoline crack was previously trading at a discount to Brent for 10 straight sessions between Dec. 10 and Dec. 21.
Indonesia, Asia’s top gasoline importer, had imported 8.2 million kilo litres of 88-octane grade gasoline in January to November this year, versus 9.4 million kilo litres for the same period in 2017. Its 92-octane grade imports for January to November this year at 8.5 million kilo litres were however higher versus the same period last year at 6.6 million kilo litres, data from the energy ministry showed.
Light distillates stocks held in Fujairah were at a three-week high of 9.88 million barrels in the week to Dec. 24.
The January crack is lower at $ 2.30 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for gasoil with 10ppm sulphur content were at 98 cents a barrel to Singapore quotes on Wednesday, the widest since Singapore’s benchmark was shifted to 10ppm gasoil in January this year from 500ppm gasoil previously. They were at a discount of 95 cents a barrel on Friday.
Cash discounts for jet fuel were at $1.19 a barrel to Singapore quotes on Wednesday, compared with a discount of $1.20 a barrel on Friday.
Jet fuel cash differentials are likely to remain more or less static around current levels at least for a couple of weeks unless some unplanned refinery outages impact immediate supply.
The January/February time spread narrowed to 42 cents a barrel on Wednesday, compared with 44 cents per barrel on Friday.
Winter kerosene demand, though much later than normal, has started to pick up sightly. Temperatures in Tokyo, Beijing and Seoul are expected to stay mostly below normal next week according to weather data and forecasts.
Middle Distillate Stocks in Fujairah eased marginally by 20 Kb to 1.62 million barrels.
The January crack is lower at $ 12.85 /bbl with the 10 ppm crack at $ 13.85 /bbl. The regrade is lower at $ 2.35 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Tumbling crude oil prices helped the front-month fuel oil crack narrow its discount to Brent crude on Wednesday but overall trade liquidity remains thin amid the year-end holidays. The January 380-cst barge crack against Brent crude was trading at about minus $6.40 a barrel on Wednesday, from about minus $6.70 a barrel in the previous trading session.
The near dated 380-cst time spreads also firmed on Wednesday. The Jan/Feb 380-cst time spread was trading at about $4.50 a tonne from about $3.75 a tonne in the previous session. Similarly the Feb/March 380-cst time spread rose to $2.75 a tonne on Wednesday from $2.25 a tonne previously. The front-month time-spread the previous Wednesday was at its lowest level since April at $1.50 per tonne.
Heavy Distillate Stocks in Fujairah dropped by 283 Kb to 6.19 million barrels.
The January 180 cst crack has jumped to $ 0.05 / bbl with the visco spread at $ 0.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Fuel oil cracks have strengthened contrary to our expectations. However, as mentioned yesterday, we would gain on physical sales.
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.