Crude Oil

Crude prices continued their consolidation on Friday as the market awaits the result of the OPEC review meeting slated for the weekend.  Brent settled at $ 50.80 / bbl, up 24 cents on the day while WTI settled 27 cents higher at $ 47.94 /bbl.

The drop for the week was 96 cents for Brent and 84 cents for WTI respectively.

Before we look at the weekend data,  a quick recapt of what has been guiding market actions.
  • That there is currently no shortage of curde oil is plain to see
  • However, refinery run rates are low currently.
  • The continuous product draws over the past few weeks imply that refineries will have to increase production levels to meet stock demand for gasoline in the driving season.  If cracks do not support the cause of ramping up production today, they will do so eventually.
  • That in turn will increase crude consumption i.e. demand for crude.
  • However, the fact that Shale Oil is going to burgeon is also painfully evident.
  • Whether this production rise is sufficient to meet the requirements of refineries coming out of winter turnaround is a question to wonder about.
  • Further this shortage will have to continue beyond a mere 3 months, that is the period of production cut arrangement that is left.
  • So will OPEC do it?
  • More importantly, will Saudi continue to hold it production to nearly 9 million barrels per day, way beyond its committed output cut not only for now, but also beyond June?

These are all the questions which the weekend conclave was expected to answer.

What it did was state it will ‘request a technical committee and the OPEC secretariat to review the market conditions and revert… in April 2017 regarding the extension of the voluntary production adjustments’ (from a Reuters report)

There seems to be a difficulty in reaching consensus on extending the production cuts which seemed to be admitted by the Kuwaiti Oil Minister Essam al-Marzouq.

The topic will be revisited by the end of April.

In other news:

  • The Rig count has increased by a whopping 21 rigs to 652 rigs.  This is the highest level since September 2015, when crude prices were still dropping.
    Source : Baker Hughes
  • Speculators cut their trading positions on WTI futures and options contracts across both NYMEX and London by 33,271 contracts to 281,804 contracts.  These are the lowest levels since December 2016.

Technical Analysis

Not much has changed technically this week. Brent is still hovering around the 200 DMA and just above the 50 WMA.

The MACD has turned on the daily charts but is still hugely in the negative zone.  Supports lie at the psychological $ 50 level and then $ 49.23 and $ 46.76.  Resistances are just above at 50.95-51.00 level and then 52.60 levels.


The physical Naphtha crack eased out today.  However, the forward prices are virtually unchanged. The MOPJ crack for April is valued at $ 0.7 /bbl.  The Singapore Naphtha crack for April is -$ 1.1


The gasoline crack finally strengthened today in reaction strong draws round the globe.

The gasoline crack for April is valued at $ 11.30 /bbl.  The May – June spread is valued at 33 cents.

Middle Distillates

Gasoil regained some of its losses on Friday.  The crack for April is valued at $ 10.95 / bbl.  Jet, however, could not keep pace with gasoin and the regrade for April flipped back into negative territory at – $ 0.15.  The regrade for May is valued at + $ 0.20 / bbl
180 CST Fuel Oil
The Fuel Oil cracks for April crack went back below -$ 4 /bbl. The current value is  -$ 4.10/bbl.

Fuel Oil Stocks in the ARA region are reported to be at a record high of close to 1.5 million tons. Stocks in Asia are at higher levels than the previous year which were also extremely high for this period in time.

Fundamentals suggest that the crack should recede further.

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.
Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity


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