Crude Oil
Crude futures surged for a second day on Fridaydue to hopes that a global deal to cut crude supply worldwide will emerge early next week.
Brent crude futures rose $ 4.17 to settle at $ 34.11 /bbl. WTI futures rose $3.02 to $28.34 a barrel.
Both U.S. and Brent contracts posted their largest weekly percentage gains on record. Brent ended the week 36.8% higher, the largest weekly percentage gain in the contract’s history. WTI posted a 31.8% gain on the week, also its largest on record.
OPEC had scheduled a Monday emergency meeting, led by Saudi Arabia, where cuts up about 10 mbpd – could be agreed-upon. However, that meeting has got postponed and crude is faltering this morning. Global benchmark oil prices traded as much as $3/bbl lower as the market opened for Monday’s trading session, reflecting fears of oversupply.
Oil traders seeking to take advantage of a price anomaly by delivering crude into Shanghai crude futures contracts are unable to do so as storage designated by the exchange is full, pushing prices even higher and distorting the market, the sources said.
Freight rates for smaller LR vessels to move naphtha and other clean oil products from the Middle East to Japan have hit near 12-year highs, Refinitiv data showed, driven by a demand surge for floating storage to combat oversupply.
Moscow and Washington still have made no firm commitments on output cuts. U.S. law forbids producers from cooperating to cut output. Even a monumental cut in world output would not reduce a glut by much due to slumping demand during the worsening coronavirus pandemic.
The Canadian province of Alberta, home to the world’s third-largest oil reserves, is open to joining any potential global pact to reduce a glut of crude.
Mexico does not plan to cut crude production at state-owned oil company Pemex, even at its most expensive oilfields, the country’s energy minister Rocio Nahle told Reuters on Friday.
Saudi Arabia is taking unprecedented action in delaying the release of its OSPs by five days, a senior Saudi source familiar with the matter said on Sunday, as the kingdom and other major producers seek to halt the free-fall in worldwide crude prices.
The US has threatened sanctions on Saudi Oil if they refuse to cut production. We don’t believe that this will produce the results that the US would want.
US energy companies reduced the number of active oil rigs for a third week in a row in their biggest weekly cut in five years, cutting 62 rigs to total 562 (-269 YoY), according to Baker Hughes.
Money managers raised their net long US crude futures and options positions by 7,249 contracts to 171,134 in the week to 31 Mar’20, the US CFTC said on Friday.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 69,459 (+16,241 over the weekend) yesterday, with the total number of confirmed infections at 1,273,720 (+157,843 over the weekend). (Click here for details).
Singapore reported 120 new coronavirus cases on Sunday, by far its highest daily rise, and quarantined nearly 20,000 migrant workers in their dormitories.
Naphtha
Asia’s naphtha crack fell for a fourth straight session, this time by about 18% to hit a discount of $31.63 a tonne (approximately $8.67 a barrel) to Brent crude.
The demand for tankers to store oil products onboard vessels to combat oversupplies have benefited ship owners as freight rates surged. Despite the higher freight rates, a massive amount of naphtha has been provisionally booked for Asia arrival in May from the West including Europe.
U.S. gasoline stockpiles were also up, rising 7.5 million barrels to 246.8 million barrels, the U.S. Energy Information Administration said.
The May crack has slumped to -$8.90 / bbl.
Gasoline
Asia’s Gasoline crack dived nearly 39% to a discount of $8.90 a barrel to Brent oil .
Gasoline stocks in ARA rose by 3.7% to hit a one-month high of nearly 1.2 million tonnes in the week to Thursday.
The May crack has plunged to -$8.60 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel widened to $3 per barrel to Singapore quotes on Friday, a fresh low since October 2008. They were at a discount of $2.85 on Thursday.
The April/May time spread for jet fuel in Singapore remained in deep contango to trade at a discount of $2.80 per barrel on Friday.
Cash discounts for 10 ppm gasoil widened to $1.12 per barrel to Singapore quotes on Friday, the biggest discounts since Singapore’s benchmark shifted to 10ppm gasoil in January 2018. They were at a discount of 96 cents a barrel on Thursday.
Gasoil stocks in ARA slipped 1% to 1.9 million tonnes in the week to April 2. ARA jet fuel inventories rose 26.8% to 572 KT. Compared with a year earlier, jet fuel stocks were down 22%, while gasoil inventories were 32.4% lower.
The May crack for 500 ppm Gasoil has plumetted to $5.90 /bbl with the 10 ppm crack at $ 6.90 / bbl. The regrade is at -$ 7.50 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The cash differential and front-month refining margin for 0.5% VLSFO in Asia both fell to record lows on Friday, dragged down by weaker deal values amid sluggish demand and ample supplies.
The VLSFO cash discount tumbled to minus $10.09 a tonne to Singapore quotes, down from minus $7.22 a tonne in the previous session and its lowest ever since records began in December.
Similarly, the front-month VLSFO crack to Brent crude fell to $4.74 a barrel on Friday, its lowest since records began in mid-July. The front-month cracks were at $6.37 a barrel in the previous session and $9.03 a barrel last week.
Residual fuel oil stocks in ARA slipped 1% from a six-month high in the previous week to 1.272 million tonnes in the week to April 2. Compared with last year, however, the ARA fuel oil inventories were 37% higher and above the five-year seasonal average of 1.114 million tonnes.
The May crack for 180 cst FO has dropped -$3.50 /bbl with the visco spread at $0.95 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh trades 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.