Crude Oil
Oil prices rose over 4% on Monday as hopes of a deeper cut in output by OPEC and stimulus from central banks countered worries about damage to demand from the coronavirus outbreak. Brent crude futures gained $2.23, or 4.5%, to settle at $51.90 a barrel. rose $1.99, or 4.5%, to settle at $46.75 a barrel.
Brent’s session low of $48.40 was its lowest since July 2017. while WTI ‘s low of $43.32 a barrel was the lowest since December 2018.
At a global level, the death toll from the COVID-19 in rose to 3125 (+147 DoD) yesterday, with the total number of confirmed infections at 90928 (+3937 DoD). The growth factor of new cases decreased to 0.98 from 1.35 on Monday. (Click here for details).
Several members of the OPEC group are mulling an additional production cut in the second quarter. The previous proposal was for an additional output cut of 600,000 bpd. Russian Energy Minister, Alexander Novak, said Moscow was evaluating a smaller oil production cut proposal made by OPEC+, adding it had not received a proposal for deeper cuts.
OPEC oil output dropped in Feb’20 to the lowest in over a decade as Libyan supply collapsed and other Gulf members overdelivered on a new production-limiting accord, a Reuters survey found. OPEC pumped 27.84 MB/D in Feb’20 (-510 KB/D MoM).
US factory manufacturing activity slowed in Feb’20 as new orders contracted, with the ISM manufacturing index falling to 50.1 from 50.9 in Jan’20, reflecting worries about supply chain disruptions related to the fast-spreading coronavirus outbreak.
Venezuela’s oil exports rose 9% MoM in Feb’20, as some buyers rushed to take cargoes ahead of the expiration of a wind-down period as part of new US sanctions on PDVSA and its trade partners, data from the state-run firm and Refinitiv Eikon showed.
Hedge funds hit pause on their petroleum sales in late Feb’20, over the previous six weeks, funds had been net sellers of 457 MB but the rate of selling has been progressively slowing for three weeks, turning into net purchases in the most recent week.
Naphtha
Asia’s naphtha crack naphtha crack was up 1.9% to reach a four-session high of $59.50 /bbl on Monday.
Demand for naphtha however was muted as buyers had recently replenished their stocks, with several deals last week. Despite cracker run cuts across Asia, naphtha spot premiums have not weakened as much as previously expected as maintenance in the Middle East, including Saudi Arabia and the United Arab Emirates (UAE), kept supplies tight.
The March crack has is lower – $2.30 / bbl.
Gasoline
Asia’s gasoline crack was at a three-session high of $4.20 a barrel on Monday.
The March crack is unchanged at $5.90 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil were at 31 cents per barrel to Singapore quotes on Monday, compared with a premium of 27 cents per barrel on Friday.
Cash differentials for jet fuel were at a discount of 2 cents per barrel to Singapore quotes on Monday, compared with a discount of 1 cent per barrel on Friday.
The March crack for 500 ppm Gasoil is unchanged at $9.15 /bbl with the 10 ppm crack at $ 10.05/ bbl. The regrade is at -$ 1.50 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSF traded at a record low discount minus 90 cents a tonne to Singapore quotes, down from minus 11 cents a tonne on Friday and its lowest since records began in December.
The March crack for 180 cst FO has dropped to -$6.75 /bbl with the visco spread at $1.20 /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.