Crude Oil
Crude oil prices ended lower on Wednesday, giving up early gains as major oil producers, including Saudi Arabia, struggled to bring Russia on board for deeper supply cuts. Brent crude futures dropped 73 cents to settle at $51.13 a barrel. WTI futures fell 40 cents to settle at $46.78 a barrel.
At a global level, the death toll from the COVID-19 in rose to 3285 (+82 DoD) yesterday, with the total number of confirmed infections at 95481 (+2321 DoD). The growth factor of new cases has dropped 0.89 from 1.32 on Tuesday. This is the lowest since Feb. 24 (Click here for details).
EIA data
Crude oil stocks in the United States grew by 785 kb, which was much less than expected. This is largely due to the record level of exports which surged to nearly 4.2 million bpd.
Gasoline and diesel stocks both fell by more than 4 million barrels each. The drop in diesel stocks seems to be largely due to an increase in demand, which is healthy.
However, our material balance statement above suggests that the draws in product stocks may have been exaggerated.
Naphtha
Asia’s naphtha crack plunged 37% on Wednesday, the largest percentage drop in a day since June 2019, to a five-month low of $40.40 a tonne following the unexpected shutdown of a mega-scale cracker in South Korea.
Lotte Chemical early on Wednesday shut a 1.1 million tonnes per year (tpy) naphtha cracker following an explosion sparked by a fire at a compressor.
The current crack value, however, was still sharply above the June 2019 level when it flipped into a discount for the first time in a decade.
The March crack has plunged to – $4.05 / bbl.
The April crack is at – $4.70 / bbl.
Gasoline
China is to ramp up gasoline exports in March and April as its refiners rid themselves of excess stock in the world’s largest energy consumer after the coronavirus outbreak hit domestic fuel sales.
Light distillate stocks in Fujairah rose by 211 kb to 7.62 million barrels in the week to March 2, data from S&P Global Platts showed.
The March crack is higher at $5.90 /bbl.
The April crack is at $4.95 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil dropped to 2 cents per barrel to Singapore quotes on Wednesday from 24 cents per barrel in the previous session.
Cash differentials for jet fuel widened their discounts to 32 cents per barrel to Singapore quotes on Wednesday, compared with a discount of 19 cents per barrel on Tuesday.
Light distillate stocks in Fujairah dropped by 42.3% to 1.96 million barrels in the week to March 2, data from S&P Global Platts showed. The weekly Fujairah middle distillate stocks were 1% lower than a year earlier.
The March crack for 500 ppm Gasoil is higher at $8.85 /bbl with the 10 ppm crack at $ 9.75 / bbl. The regrade is at -$ 1.70 /bbl.
The April crack for 500 ppm Gasoil is at $9.00 /bbl with the 10 ppm crack at $ 9.65 / bbl. The regrade is at -$ 1.55 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month VLSFO time spread fell to a more-than three-month low of minus $3.75 a tonne, while the front-month VLSFO crack fell to a three-session low of $10.93 a barrel above Brent.
Similarly, the front-month 380-cst HSFO time spread flipped to a discount of 50 cents a tonne on Wednesday, its lowest level in three months. The front-month 380-cst barge crack against Brent also widened its discount to minus $13.87 a barrel, down from minus $13.21 in the previous session, the data showed.
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.
Residual Fuel stocks in Fujairah dropped by 1.61 million barrels (11%) to 13.56 million barrels in the week to March 2, data from S&P Global Platts showed. Compared with year-ago levels, however, the weekly fuel oil inventories at FOIZ were 58% higher.
The March crack for 180 cst FO is higher at -$7.35 /bbl with the visco spread at $1.20 /bbl.
The April crack for 180 cst FO is at -$7.35 /bbl with the visco spread at $0.90 /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.