Crude Oil
U.S. crude prices fell to an 18-year low and Brent lost more than 6% on Wednesday after the United States reported its biggest weekly inventory build on record.
Brent futures fell $ 1.91 to settle at $27.69 a barrel, WTI crude futures fell by 24 cents to settle at $19.87, its lowest close since February 2002.
The IEA forecast oil demand would dive 29 million barrels a day in April to levels unseen in 25 years and said no output cut could fully offset the near-term falls facing the market.
The agency, in its report, said it was “still waiting for more details on some planned production cuts and proposals to use strategic storage.” The United States, India, China and South Korea have either offered or are considering such purchases, the IEA added.
As crude tank farms around the United States and globally fill, oil futures contracts suggest a heavy glut will overhang markets for months.
Saudi Aramco has offered oil refineries in Asia and Europe the option to defer payments for crude cargo deliveries by up to 90 days as plants struggle with shrinking demand, four refining industry sources said. However, there were also reports of Saudi Aramco denying that any such offer had been made.
US retail sales suffered a record drop in Mar’20 (-8.7% MoM) and output at factories declined by the most since 1946 (-6.3% MoM), buttressing analysts’ views that the economy contracted in Q1’20 at its sharpest pace in decades.
Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the coronavirus crisis takes an “unprecedented” toll on the region’s service sector and major export destinations, the IMF said on Thursday.
EIA data
Crude stocks in the United States surged by 19 million barrels last week as refiners cut capacity use to 69.1%, their lowest levels since 2008. Gasoline stocks have also risen to record levels while diesel stocks have spurted in an unusual manner.
Demand for both Gasoline and Distillates continue to drop. However, the huge changes in stocks are at odds with our material balance statement.
Our material balance statement shows that both crude as well as gasoline stocks should be almost at similar levels as the previous week. Distillate stocks are more in consonance with the statement though.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 134,616 (+8,012 DoD) yesterday, with the total number of confirmed infections at 2,083,326 (+85,215 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack recovered to a 1-1/2 week high at a discount of $30.90 a tonne to Brent crude compared to a discount of $55.38 on Tuesday.
The May crack has improved to -$4.30 / bbl.
Gasoline
Asia’s gasoline crack was at a discount of $9.72 a barrel to Brent crude versus a discount of $13.15 on Tuesday. As poor as this number seems, it was a one and a half week high as well!
The May crack has improved to -$3.60 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for jet fuel widened to $3.63 per barrel to Singapore quotes on Wednesday, the biggest discounts since November 2005. They were at a discount of $3.38 per barrel a day earlier.
Global jet fuel demand likely fell by 2.1 million barrels per day (bpd) in March following the widespread implementation of travel bans and the grounding of a large proportion of the world’s aircraft fleet from around the middle of the month, the International Energy Agency (IEA) said on Wednesday. “The full effect of these measures is likely to be seen in April, when demand will fall by 4.6 million bpd (-59%), a historic record,” the IEA said in its monthly report.
Cash discounts for 10 ppm gasoil widened to $3.10 per barrel to Singapore quotes on Wednesday, compared with a discount of $2.69 a barrel on Tuesday. The prompt-month spread for 10 ppm gasoil traded at a discount of $2.62 a barrel on Wednesday, the widest contango as per data that goes back to October 2013.
Middle-distillate inventories in Fujairah rose 15.45% to 2.9 million barrels in the week to April 13, data via S&P Global Platts showed. Stocks of middle distillates in the Fujairah oil hub have averaged 3 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019. The weekly Fujairah middle distillate stocks were about 49% higher than a year earlier.
The May crack for 500 ppm Gasoil has improved to $6.05 /bbl with the 10 ppm crack at $ 8.40 / bbl. The regrade is at -$ 4.95 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO cash discounts fell to an all-time low of minus $10.79 a tonne to Singapore quotes, dropping past the previous record low of minus $10.09 a tonne hit on April 3.
Similarly, discounts for 180-cst HSFO fell to a record low of minus $10.76 a tonne to Singapore quotes, while discounts for 380-cst HSFO fell to their lowest since 2008 at minus $9.01 a tonne.
Fuel oil stocks held in Fujairah slipped 2% in the week to April 13, down from a record high in the previous week. Inventories for heavy distillates and residues snapped four straight weeks of gains, edging 351 KB lower to 15.09 million barrels in the week to April 13, data via S&P Global Platts showed. Compared with year-ago levels, the weekly fuel oil inventories at Fujairah were 32% higher. Fuel oil stocks have averaged at 12.93 million barrels this year, compared with a weekly average of 10.8 million barrels in 2019.
The May crack for 180 cst FO has eased to -$2.00 /bbl with the visco spread at $0.60 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh trade 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 refinery.
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.