ICIS is reporting today that Shell sold open spec naphtha to Cargill at $267 CFR Japan, for the first half of January. Normally the naphtha: crude ratio is around 9.5: 1. But with January Brent at $66/bbl, the ratio is now just 4:1. The blog can safely say we have never seen it this low before. And naphtha is not the only oil product facing a glut, with Petromatrix commenting that US refinery margins are currently "under extreme pressure".
With Reuters reporting that Saudi Arabia is cutting oil exports by 900,000 bpd, Cargill's purchase is logical. But the fact that a well-informed player such as Shell was selling, makes the blog slightly wary. If refiners are forced to cut runs for December, then it would be hard for OPEC to cut its own production quickly enough to compensate. In that case, a $20 - $30/bbl range for crude, albeit temporarily, would not be impossible.