Crude Oil
Oil prices recovered a little on Friday, partly in response to economic stimuli and partly in response to short covering.
Brent crude futures rose 63 cents to settle at $33.85 a barrel. WTI futures rose 23 cents to settle at $31.73 a barrel.
The rare combination of severe shocks to both supply and demand has caused the crude market to collapse as producers around the world steel themselves for an unexpected glut of oil in coming weeks.
But Brent crude dropped 25% on the week while WTI futures fell about 23%. This is their biggest percentage decline since 2008.
At a global level, the death toll from the COVID-19 in rose to 4,979 (+536 over the weekend) yesterday, with the total number of confirmed infections at 169,531 134,716 (+35,215 DoD). The growth factor of new cases outside fell to 1.02 on Saturday. While this number is likely jump up on Monday, it needs stressing that the number of fatalities per se are not increasing and therefore, the recovery rate being registered, is higher. (Click here for details).
Oil prices extended losses on Monday, slumping by more than $1 a barrel, as an emergency rate cut by the US Federal Reserve failed to soothe global financial markets panicked by the rapid spread of the coronavirus and mounting economic disruptions.
President Donald Trump said on Friday that the United States would take advantage of low oil prices and fill the nation’s emergency crude oil reserve, in a move aimed to help energy producers struggling from the price plunge.
The US oil drilling rig count rose for a second week in a row, adding 1 rig to total 683 (-150 YoY), despite a massive drop in both oil and natural gas prices this week and projections by many analysts that the number of rigs will fall as producers deepen their spending cuts on new drilling.
China’s industrial output contracted at the sharpest pace in 30 years in the first two months of the year, falling 13.5% YoY, as the fast spreading coronavirus and strict containment measures severely disrupted the world’s second-largest economy, data showed on Monday.
Japan’s core machinery orders unexpectedly rose in Jan’20, rising 2.9% MoM, in a positive sign for business investment though worries remain about the economic outlook in light of the widening fallout from the coronavirus outbreak.
Early this morning there was also news of the US Federal Reserve slashing rates by a full percentage point to near zero.
Global observed crude and condensate in floating storage rose to around 70 MB at the beginning of this week, having risen by 15% WoW, oil analytics firm Vortexa said. 26 MB of the total observed floating crude inventory as of 11 Mar’20 were in Asia, 40% of which is floating near China’s Jiangsu province.
Naphtha
No fresh news on the naphtha markets.
The April crack has dropped to -$2.30 / bbl.
Gasoline
Asia’s physical gasoline crack dived 57%, the largest single day drop since May 2019, to hit a near nine-month low of $2.29 a barrel on Friday
ARA onshore light distillates stocks dropped by 105 KT to 1.12 million KT in the week to 12th March, a four week low.
The April crack has dropped to -$0.80 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s jet fuel crack recovered to a two-session high of $7.67 a barrel on Friday after it saw its largest single-day percentage plunge in the previous session as demand was hit hard by travel restrictions. The 58 cents increase on Friday was due to crude oil persisting below $40 a barrel following a price war between top producers Saudi Arabia and Russia. Asian refiners may be forced to curtail jet fuel output.
ARA onshore gasoil stocks dropped by 229 KT to reach 1.92 Million tonnes. This is the lowest level since December 18 and a five year low.
The April crack for 500 ppm Gasoil has collapsed to $8.50 /bbl with the 10 ppm crack at $ 9.10 / bbl. The regrade is at -$ 3.25 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO crack to Brent crude ended the week firmer, despite higher crude oil prices, amid signs of improved demand for marine fuels. The front-month crack rose to $12.57 a barrel, up from $10.68 a barrel in the previous session.
Singapore marine fuel sales fell to a four-month low of 3.88 million tonnes in February, down 14% from the previous month but 3% higher from last year, data from the Maritime and Port Authority of Singapore (MPA) showed on Friday.
ARA fuel oil inventories rose by 245 KT in the week ended March 12 to 1.23 million tonnes, official data showed on Thursday. This is an 11 month high for the inventory levels.
The April crack for 180 cst FO is steady at -$3.75 /bbl with the visco spread at $1.20 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
The FO crack is strengthening again in the prompt. We shall add an hedge for 180 cst – Dubai for April at current levels of -$3.75 / bbl.
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.