wishing all our readers a very happy and prosperous 2019
Crude Oil
Oil prices steadied on Friday after a week of volatile trading ahead of the New Year holiday. Brent crude futures rose 4 cents to settle at $52.20 a barrel. WTI crude futures rose 72 cents to settle at $45.33 a barrel.
Both benchmarks posted third straight weekly declines, with Brent losing about 3 percent and WTI nearly 0.4 percent. Crude prices were pushed higher by a rally in the U.S. equities market on Friday.
The DOE report, released on a Friday for the first time in many years of memory, showed a miniscule drop of 46 KB against the large rise in crude stocks shown by the API. Market analysts had expected a decrease of 2.9 million barrels so the drop was still a lot less than expected.
DOE stocks are at 441 million barrels as compared to 448.2 million barrels reported by API, so there may be some more massive differences in future.
Gasoline stocks also built significantly whereas Distillate stocks were flat. However, the material balance suggests that distillate stocks should have built significantly while crude stocks should have drawn more.
Naphtha
Asia’s naphtha crack rose by more than 10 percent to reach a nearly 10-week high of $66.93 a tonne as a string of recent demand helped dissolve a glut. Nonetheless, 2018’s average ended at a two-year low of $80.90 a tonne as supplies were comparatively high with more European and Mediterranean cargoes seen arriving this year versus 2017. The weak gasoline fundamentals also impacted naphtha as the latter is also used as a blending component in petrol.
The January crack has strengthened to -$ 1.45 /bbl
Gasoline
Asia’s gasoline crack edged up 4 cents to 39 cents a barrel on Friday, meaning 2018’s average came in at the lowest level since 2009 at $6 a barrel.
High supplies have repeatedly battered the market this year due to strong refinery throughput and slower growth in gasoline demand. From Singapore to Europe, gasoline was in abundance with the latest weekly data from those two regions showing high inventories. Gasoline stocks in the US are at a seasonal high as well.
Gasoline stocks held independently at ARA surged 20.3 percent to reach an 8-1/2 month high of 1.276 million tonnes in the week to Dec. 27. That was around 50 percent higher than levels a year ago.
China could keep its gasoline exports high at least in the first quarter of next year as its government has granted higher export fuel quotas to domestic refiners. China’s first batch of refined fuel export quotas for 2019 has been set at a total of 18.36 million tonnes, 13 percent more than the first issue for this year. The quotas comprise 8.7 million tonnes of diesel, 5.19 million tonnes of gasoline and 4.47 million tonnes of kerosene.
The January crack is lower at $ 2.00 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for gasoil with 10ppm sulphur content narrowed to 85 cents a barrel to Singapore quotes on Friday, as against a discount of 93 cents a barrel on Thursday.
Gasoil stocks in ARA dropped about 1 percent in the week to Thursday, making Asian traders look for opportunities to ship more gasoil cargoes towards the West. The gasoil price spread between Singapore and Northwest Europe widened to around minus $22 per tonne on Friday,
Cash discounts for jet fuel were at $1.23 a barrel to Singapore quotes on Friday, compared with a discount of $1.21 a barrel a day earlier.
The January crack is lower at $ 11.35 /bbl with the 10 ppm crack at $ 12.30 /bbl. The regrade is stronger at $ 2.70 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s fuel oil markets were largely steady on Friday amid muted activity in the year’s final trading session. Despite limited liquidity, the January 380-cst barge crack against Brent crude was slightly weaker amid higher crude oil prices at about minus $6.70 a barrel on Friday, from about minus $6.40 a barrel in the previous trading session.
Meanwhile, term 380-cst ex-wharf premiums for January were concluded at about $6.50 to $7.50 per tonne to Singapore quotes, down from the $12.50 to $14.50 per tonne term premiums for December. Tight availability of finished grade 380-cst bunker fuels kept ex-wharf premiums of the fuel high in December.
The January 180 cst crack is lower at -$ 0.20 / bbl with the visco spread at $ 0.55 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
On the last day of the year, we have closed off our hedge for Cal 19 Jet. Fuel oil cracks have eased once again. The regrade appears to be staying strong as a consequence of Jet hedging by consumers. We expect these to ease going forward.
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.