Crude Oil
Crude prices rallied smartly from lows on rumors that cuts would deepen. After hitting a low of $50.71 /bbl Brent settled 69 cents higher at $52.15 per barrel and WTI settled 90 cents higher at $49.80 per barrel.
As mentioned earlier, most of this rise was due to short covering, especially in the wake of a report that Russia would discuss the possibilities of deepening the cut with Saudi Arabia. Weak shorts would have also got killed along the way.We would tend to disbelieve this news. Deepening was on the cards during the discussion. The consensus reached was that there would be no deepening. It would perhaps be more accurate to say that no consensus was reached on deepening and Saudi did not wish to be the only country deepening cuts.
Over the weekend, Baker Hughes reported a rise in the number of rigs by two to reach a total of 722. While the rig count has risen for the 19th straight week, this rise this week has been extremely small. Indeed the rise this month has been the least since October.
Technical Analysis
Technically, Brent futures managed to climb up above the 200 DMA on Friday was makes this support an even stronger support. However, the oscillators are still showing signs of weakness, so we would recommend caution if adding longs at this stage. The weekly chart shows that prices have dipped below the 13 WMA which should add to the sense of caution.
Supports are at around $ 52 (the 200 DMA), $ 51.64 and then at $ 50.46 below. Resistances are at $ 52.28, and $ 52.47 above.
Naphtha
The Naphtha physical market as well as paper markets moved up.
The June Japan Naphtha- Dubai crack was seen stronger at -$1.15 /bbl. This could be due to drop in crude prices.
Gasoline
Gasoline cracks continued to strengthen today. The June crack is valued at over $ 11. /bbl today.
Distillates
Distillate cracks eased marginally with June being valued around $ 10.30 /bbl. The regrade continues to be strong in at 50 cents/bbl. but the curve appears to be slowly settling lower.
Fuel Oil
After nearly three months of buying interest, both Petro China and Mercuria turned sellers. Petro China and Mercuria sold to Coastal and Hin Leong respectively. While stocks appear to be near five year lows, over seven VLCCs are reported to be floating carrying Fuel Oil stocks (source Reuters), Hence traders still fear a supply shock into Singapore.
The June 180 cst crack is now valued at -$ 3.10 / bbl. The visco spread is still around $ 1.20 /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
