Crude Oil
Oil prices rebounded over 8% on Tuesday as the possibility of economic stimulus encouraged buying and U.S. producers slashed spending in a move that could cut output..
Brent crude futures $2.86, or 8.3%, to settle at $37.22 a barrel. WTI futures rose $3.23, or 10.4%, to settle at $34.36 a barrel.
On Monday, U.S. President Donald Trump pledged “major” steps to gird the U.S. economy against the impact of the spreading coronavirus outbreak.
The US DOE said on Tuesday it has suspended a sale of up to 12 MB of oil from the SPR due to the petroleum price drop. The sale was announced in late Feb’20, before the price war between major oil producers Saudi Arabia and Russia sank crude prices
Russian oil minister Alexander Novak said he did not rule out joint measures with OPEC to stabilize the market, adding that the next OPEC+ meeting was planned for May-June. Saudi Arabia’s energy minister, however, said he did not see a need to hold an OPEC+ meeting in May-June if there was no agreement on measures to deal with the impact of the coronavirus on oil demand and prices.
Sentiment was also lifted after Chinese President Xi Jinping made his first visit to Wuhan since the coronavirus outbreak forced an unprecedented lockdown of the city of 11 million people, a sign that efforts to control the virus are working.
At a global level, the death toll from the COVID-19 in rose to 4295 (+268 DoD) yesterday, with the total number of confirmed infections at 119,179 (+4,752 DoD). The growth factor of new cases rose to 1.13 from 0.98 yesterday.(Click here for details).
Tuesday was the first day of an unprecedented nationwide lockdown in Italy, with health authorities announcing the death toll had jumped by 168 to 631, with the total number of confirmed cases at 10,149 (+977 DoD).
Japan’s government said it planned to spend more than $4 billion in a second package of steps to cope with the virus.
Many governments are insisting on a self quarantined period of 14 days for people traveling to their country from regions hit by the virus.
api data
U.S. crude oil inventories rose 6.4 million barrels last week to 453 million barrels, data from the API showed on Tuesday. Official U.S. government data is due on Wednesday.
Naphtha
Asia’s naphtha crack surged nearly 27% on Tuesday to reach a five-session high of $52.78 a tonne, with the inter-month spread returning to the positive territory after it flipped to a discount the previous day for the first time since last September.
The April crack has dropped to -$0.40 / bbl.
Gasoline
Asia’s gasoline crack rose to a three-week high of $6.97 a barrel. Exports of China’s total oil products for January-February hit 10.75 million tonnes, up 16.6% from a year ago.
The April crack has dropped to $5.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian refining margins for 10ppm gasoil rose to a two-month high of $13.30 a barrel on Tuesday, while cash differentials flipped to the positive zone for the first time in nearly a week amid weak oil prices and as more workers returned to work in China. Jet fuel cash differentials, however, remained in the negative zone for the ninth straight session.
The April crack for 500 ppm Gasoil is higher at $12.00 /bbl with the 10 ppm crack at $ 12.65 / bbl. The regrade is at -$ 1.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month 0.5% VLSFO time spread rebounded on Tuesday from a four-month low in the previous session after suffering steady losses since February amid concerns of slowing demand and rising supplies. The April/May VLSFO time spread rose to minus $5.50 a tonne, up from minus $6 a tonne in the previous session – its lowest since Nov. 14.
Despite the threat of higher supplies, however, the front-month 380-cst HSFO barge crack was at its narrowest discount in eight and a half months at minus $9.82 a barrel below Brent crude.
The April crack for 180 cst FO has dropped to -$4.30 /bbl with the visco spread at $1.10 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
Most of the hedges we laid on yesterday look in the money. 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.