Crude Oil
Oil prices fell about 1% on Friday on renewed concerns about crude demand being pinched by the economic impact of the Covid 19 outbreak. Brent futures fell 81 cents to settle at $58. a barrel. WTI crude futures settled 45 cents higher at $53.38 a barrel.
Both benchmarks were on track for their second consecutive weekly rise, with Brent up 2% and U.S. crude rising 2.6%, as fears over the virus’ impact on demand eased earlier in the week.
However, on Friday, signs of infections outside the Hubei province epicentre in China spurred a selloff across financial markets. This was exacerbated by the absence of any urgency on the part of OPEC and allied producers to curb output.
The death toll from the COVID-19 in rose to 2,471 (+224 DoD) yesterday, with the total number of confirmed infections at 79,163 (+1,785 DoD). While several new cases of infection have been detected over the weekend with Italy being the latest country to show a significant number of cases, the daily cases growth factor has once again cooled down to 0.92 from 1.89 on Friday. (Click here for details). We, therefore remain cautiously optimistic about the containment of the virus.
The United Nations said ceasefire talks were back on track between forces fighting over Libya’s capital.
Yemen’s Houthis said they had struck facilities of Saudi oil giant Aramco in the Red Sea port of Yanbu.
In the United States, the oil rig count rose for the third week in a row as drillers added 1 rig to total 679 (-174 YoY) even though growth in the country’s largest shale formation slows as producers cut spending on new drilling for a second consecutive year, according to Baker Hughes.
Hedge funds slashed bullish wagers on US crude to the lowest level since Oct’19, data showed on Friday, cutting their combined futures and options position in New York and London by 28,341 contracts to 118,732 in the week ended 18 Feb’20, according to the CFTC.
Naphtha
Asia’s naphtha crack rose to reach a one-week high of $65.45 a tonne on Friday as demand emerged but spot premiums were sharply lowered.
Scheduled cracker maintenance in March in Malaysia, Japan and Taiwan is going to hurt naphtha demand in addition to the impact of the Covid 19 virus.
The March crack has improved to – $ 2.55 / bbl.
Gasoline
No fresh news on the gasoline markets. ARA’s onshore light distillates stocks fell by 41 KT to 1.20 million tonnes in the week to Thursday.
The March crack is lower at $8.15 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil dropped to 36 cents a barrel to Singapore quotes on Friday, down from 40 cents a barrel on Thursday.
ARA’s gasoil inventories fell 112 KT to 2.25 million tonnes. This is the third consecutive drop in weekly stocks.
Cash discounts for jet fuel narrowed to 19 cents per barrel to Singapore quotes on Friday, compared with a discount of 26 cents per barrel a day earlier
The March crack for 500 ppm Gasoil recovered to $9.75 /bbl with the 10 ppm crack at $ 10.65 / bbl. The regrade is at -$ 1.35 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO crack to Brent crude fell to fresh lows on Friday, extending weekly losses amid weak market sentiment. The crack fell to a more than three-month low of $13.57 a barrel on Friday, down from Thursday’s $14.55 a barrel. The front-month crack was at $15.75 a barrel on Monday.
ARA’s Fuel Oil inventories fell 70 KT to 1.04 million tonnes, a three week low.
The March 180 cst crack has risen to -$ 8.05/ bbl with the visco spread at $ 1.40 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action for 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 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.