On a short trading day following the US Thanksgiving holiday, crude prices continued its uptick. Brent settled 54 cents higher at $63.89 /bbl. WTI jumped 93 cents to settle at $58.95 /bbl.
For the week, WTI gained about 4.2%, while Brent marked a climb of about 1.8%.
The key factor to the phenomenal rise in crude prices this week has been the disruption to the Keystone pipeline connecting Canada’s Alberta oil sands to U.S. refineries has reduced the usual 590,000 barrel-per-day flow to U.S. refineries, driving down inventories at the storage hub of Cushing, Oklahoma
Flow from the pipeline, which was shut on Nov. 16 following a 5,000-barrel spill in South Dakota, was expected to be reduced by 85% through the end of November, according to line operator TransCanada.
While commentators are going on about the extension of production cuts, we believe that that factor has already been priced in.
The WTI Brent spread has come in tremendously settling at under $ 5 /bbl for the first time in a very long time. Since the Keystone pipeline shut down is a temporary phenomenon, it may well be worth trading the spread over the next couple of weeks pending reopening of the pipeline.
The Baker Hughes rig count, normally released on Friday, was released on Wednesday, the day before Thanksgiving. It showed that 9 more rigs had been added in the past week to bring the count to 747. The rig count has shown a monthly gain after 3 months of declines.
Technically the daily chart is showing strong bullish tendencies with the MACD poised to cross over from below. We can even observe a sharply rising channel within the existing rising channel that has been a trend since July this year.
Having said that, if we observe the slope of the inner green channel, it appears to be too steep to sustain for long. This is complemented by bearish divergences emerging in the MACD in the weekly charts
Supports lie at $ 63.29, $ 62.87 and $ 62.45. Resistances lie at current levels i.e. $ 63.89, $ 64.65 and $65.68
Asia’s naphtha crack ended last week at a 1-1/2 week high of $127.95 /MT. Spot premiums for cargoes continue to remain at record highs due to limited supplies.
The December crack continues to rise and is valued at $ 4.45 /bbl.
Gasoline inventories held independently at the Amsterdam-Rotterdam-Antwerp (ARA) storage and refining hub touched a two-week low of 923,000 MT in the week of November 22, mirroring the trend in Singapore where light distillates stocks, comprising mainly gasoline, fell last week.
The December 92 Ron paper crack has strengthened further to $ 12.10 /bbl.
Distillate cracks remain supported amidst a balanced market. The Platts Asian Trading Window on Friday was fairly active witnessing five Singapore gasoil cash deals.
The December 0.05% Gasoil crack is unchanged at $13.40 /bbl. The regrade has improved further to $ 1.15 /bbl.
Akin to Singapore, fuel oil inventories in ARA were also down in the week to November 23. As compared to the week earlier, stocks last week fell 18 % to a total of 1.049 million MT. However, compared to the same time last year, ARA fuel oil inventories are a whopping 61 % higher, and are above the five-year average of 839,000 MT for this time of the year.
The December 180 cst crack is unchanged at -$ 2.90 /bbl. The visco spread is valued at $ 0.65 /bbl.
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