Crude Oil
Oil prices inched higher on Thursday, helped by late-day buying in a low-volume session to close out the week.
Brent crude futures for February settled 9 cents higher at $51.29 a barrel, while WTI futures rose 11 cents to $ 48.23 per barrel.
The market built gains overnight as Britain and the European Union reached a post-Brexit trade deal, reversed those gains, and then rebounded during the U.S. session to end modestly higher.
For the week, U.S. crude fell 1.6% while Brent lost 2%.
China’s crude oil imports from Saudi Arabia were up 3.3% YoY to 8.48 MMT (~2.06 MB/D), while imports from the US soared 13 fold YoY in Nov’20 to 3.61 MMT (~879 KB/D).
Russia will call for another 500 KB/D oil production increase by the OPEC+ alliance starting Feb’21 if market conditions remain stable, its deputy PM said 25 Dec’20.
Japan’s industrial output stalled in Nov’20 after rising for five months, with official data showing factory output was flat MoM, as declining output of cars offset strength in production and general machinery output.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 1,7771,467 (+7,041 DoD) yesterday. The total number of active cases rose by around 0.5 million over the long weekend to 22.08 million. (Click here for details).
Naphtha
Asia’s naphtha and gasoline cracks gained on Thursday amid expectations of lower supplies, while trade was thin ahead of holidays.
The prompt naphtha spread between second-half of February and second-half of March rebounded after a dip on Wednesday as a deal was concluded on Thursday at $4.25 a tonne.
Naphtha has been supported this month amid a flurry of purchases from north Asian petrochemical producers in the past two weeks as three South Korean crackers are set to resume operations in December and January after months of maintenance and outage while Asia’s petrochemical margins are robust.
The January crack is higher at $1.15 /bbl.
Gasoline
Asia’s gasoline crack returned to its highest since October, buoyed by lower exports from China in November and supportive data from the United States.
The January crack is higher at $3.80 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel narrowed by 2 cents to 11 cents per barrel to Singapore quotes, the smallest discounts since Dec. 8.
The jet fuel market has been gradually improving in recent weeks after the COVID-19 pandemic brought air travel to a virtual halt this year, and market watchers believe passenger traffic would be steadily on the rise as vaccine roll-outs spur more international flights in 2021.
The Jan/Feb time spread for the aviation fuel in Singapore slimmed its contango structure by 2 cents on Thursday to trade at a discount of 22 cents per barrel.
Gasoil volumes from the Middle East and India to Asia have edged higher in Dec’20 to 460 KT from 450 KT in Nov’20 amid a strong EFS spread and weak demand in Europe, market sources said 24 Dec’20.
Singapore’s middle distillate inventories slipped 2.5% to 15.1 million barrels in the week to Dec. 23, according to Enterprise Singapore data. Weekly Singapore middle distillate inventories have averaged about 13.8 million barrels in 2020.
China’s diesel exports in November fell 13.2% year-on-year to 1.92 million tonnes, which was also down from 2.17 million tonnes in October, data from General Administration of Customs showed.
The country’s jet fuel exports edged higher month-on-month to 460,000 tonnes, thanks to a slight recovery in international flights and steady demand for domestic travel, though the volume was still 71.5% lower than a year earlier, customs data showed.
The January crack for 500 ppm Gasoil is unchanged at $5.60 /bbl with the 10 ppm crack at $ 6.40 / bbl. The regrade is at -$ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO cash differential flipped to a premium on Thursday as Singapore onshore fuel oil inventories fell to a one-year low. The VLSFO cash differential for cargoes of the fuel climbed to 10 cents a tonne, up from a discount of 23 cents in the previous session and a near three-month low of minus $1.44 a tonne last week.
The tightening supplies also buoyed VLSFO’s front-month crack to a near one-month high of $10.54 a barrel above Dubai crude oil prices.
Singapore’s residual fuel oil inventories fell by 11% in the week to Dec. 23 amid lower net import volumes, as suppliers cleared inventories before the end of the year. Onshore fuel oil stocks fell by 2.435 million barrels, or about 383,000 tonnes, to 20.394 million barrels, or 3.212 million tonnes, their lowest since the week to Dec. 25 last year, Enterprise Singapore data showed. Residual fuel stocks were up 1% from a year earlier. Net import volumes in the week ended Dec. 23 were down 44% from the previous week to a five-week low of 523,000 tonnes and below the 2020 weekly average of 677,000 tonnes.
The January crack for 180 cst FO is unchanged at -$2.40 /bbl with the visco spread at $0.70 /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.