Crude Oil
Oil Prices ended up mixed on Tuesday. Brent crude futures dipped 4 cents to settle at $51.86 a barrel. WTI futures rose 43 cents to settle at $47.18 a barrel.
The Feds efforts to stimulate the U.S. economy and OPEC’s planned rate cuts staunched some of the losses on Tuesday, as heavy volumes were traded. On Tuesday 399,600 contracts for the Brent front-month and 971,000 for WTI changed hands. That compares with 417,555 for Brent and 949,741 for WTI on Monday.
Prices rose sharply after the Fed rate cut, with Brent hitting a session high of $53.90 a barrel, and U.S. crude touching $48.66 a barrel. But prices retreated and turned negative as investors worried about severe global demand destruction from coronavirus.
Crude prices took a knock when a panel of OPEC and its allies, the Joint Technical Committee (JTC), recommended extending existing cuts to the end of 2020 and a further cut of 600,000 bpd in the second quarter, the same level it recommended last month.
At a global level, the death toll from the COVID-19 in rose to 3203 (+78 DoD) yesterday, with the total number of confirmed infections at 93160 (+2232 DoD). The growth factor of new cases increased to 1.32 from 0.98 on Tuesday. (Click here for details).
A panel of OPEC and its allies recommended cutting oil output by an extra 1 MB/D on Tuesday signalling that Russia and Saudi Arabia were moving closer to a deal to prop up prices which have been hit by the coronavirus outbreak.
China’s services sector had its worst month on record in Feb’20, with the Caixin/Markit services PMI almost halving to 26.5 from 51.8 in Jan’20, as new orders plummeted to their lowest level since the global financial crisis.
India’s oil product demand for the new fiscal year starting Apr’20 is forecast to grow by 3.24% YoY to 223 million MT, the PPAC showed in its latest update. It is expected to be scaled down in the next revision to take into account the COVID-19 outbreak.
api data
The markets probably expected refinery run cuts combined with a reduction of exports resulting in the expectation of a larger build in crude stocks. Official stock data will be released today.
Naphtha
Asia’s naphtha crack rose for the third straight day on Tuesday, gaining 7.7% to reach a 1-1/2 week high of $64.10 a tonne.
Ongoing refinery turnaround in the Middle East including Saudi Arabia and the United Arab Emirates has been a key factor keeping naphtha premiums strong even when naphtha crackers across Asia had resorted to cutting runs to combat the high feedstock costs.
The March crack is higher at – $2.05 / bbl.
Gasoline
Asia’s gasoline crack similarly rose for the third day to reach a four-session high of $4.68 a barrel. But this is down by almost half compared to this year’s peak on Feb. 11 as regional demand has been hurt by the coronavirus. Uncertainties over Chinese exports were also causing volatility in the market.
The March crack is lower at $5.00 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil were at 24 cents per barrel to Singapore quotes on Monday, down from 31 cents per barrel in the previous session.
Cash differentials for jet fuel were at a discount of 19 cents per barrel to Singapore quotes on Tuesday, compared with a discount of 2 cents per barrel on Monday.
The March crack for 500 ppm Gasoil has dropped $8.40 /bbl with the 10 ppm crack at $ 9.30 / bbl. The regrade is at -$ 1.60 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The VLSFO cash discount was at a record low of minus $5.13 a tonne to Singapore quotes, wider than minus $2.90 a tonne on Monday and the most since record-keeping started in December.
The VLSFO market has been declining steadily over recent weeks, retreating from record highs near the start of the year. Increasing capacity in China and weak domestic demand, fuelled in part by the Sino-U.S. trade war, led to a surge in refined product exports to the rest of Asia in 2019, leading to depressed prices across the region.
The March crack for 180 cst FO has dropped to -$7.60 /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.