Crude OilCovid StatsNaphthaGasolineDisitllatesFuel OilHedge Strategy

Crude prices fell more than 4% on Monday, reversing the pre-Good Friday rally, as traders frowned upon the decision by OPEC+ to put to rest its year-long production cuts on the assumption of increasing summer demand for oil. 

Brent crude settled down $2.71, or 4.2%, at $62.15 per barrel. Brent’s session low was $61.25, a bottom not hit March 25.

WTI settled down $2.80, or 4.6%, at $58.65. WTI earlier hit a two-week low of $57.63.

The volatile price action was largely the result of oil demand fears. The U.K. announced that it may continue to ban foreign travel beyond the May 17 date if coronavirus infections continue to ramp up around the world.

Also weighing on prices is a surge in coronavirus cases in India—a major oil importer. India reported on Monday the highest number of new daily Covid-19 cases since the pandemic began, triggering a lockdown in its largest city of Mumbai. This could threaten fuel demand.

Crude prices also came under pressure as Iran opened talks with global powers in Vienna to find a way to end the two-year-old U.S. sanctions on its oil imposed by the former Trump administration.

Indian state refiners will buy 36% less oil from Saudi Arabia in May’21 than normal, three sources said, in a sign of escalating tensions with Riyadh even after the Kingdom supported the idea of boosting output from OPEC+.

India’s IOC has made its first purchase of Norway’s Johan Sverdrup crude, taking delivery of 2 MMB of the North Sea crude each in May’21 and Jun’21 as it speeds up diversification of crude imports, two trade sources told Reuters.

At a global level, the death toll from the COVID-19 virus rose to 2,873,263 (+7,271 DoD) yesterday. The total number of active cases fell by around 10,000 DoD to 22.84 million. (Click here for details)

India reported a record rise in COVID-19 infections on Monday, becoming the second country after the US to post more than 100,000 new cases in a day, as politicians stage massive election rallies raising fears.

Asia’s naphtha crack rebounded to a one week high of $101.25 per tonne up from$98.15 per tonne on Thursday.

The April crack is higher at $1.65 /bbl. The May crack is at $ 1.75 /bbl

Asia’s gasoline crack climbed on Monday for a fifth straight session on signs of improving demand and regional refinery outages.

The gasoline crack settled at $7.20 a barrel, the highest since Feb. 14 2020. That compared with $7.17 the previous day.

Australia received 190,000 barrels per day of gasoline cargoes in March, almost double the volumes in the first two months of the year, according to a Vortexa note on Monday.

Incremental gasoline supplies were mostly coming from Singapore, chartered by BP, Vitol and Petrochina among others, according to the note.

The April crack is higher at $9.20 /bbl. The May crack is at $9.60 /bbl

Click Here for a graphical depiction of Global Gasoline stocks by region.

Cash discounts for 10 ppm gasoil narrowed to 23 cents per barrel to Singapore quotes, supported by an uptick in buying interest for physical cargoes in the trade window on Monday.

The April/May time spread for the benchmark 10 ppm gasoil grade in Singapore, which has changed its contango structure over the last two weeks, traded at a discount of 21 cents per barrel on Monday, Refinitiv Eikon data showed.

The regional gasoil market is currently awash with supplies, especially due to heavy export volumes from China and India, while recovery in demand remains lacklustre, trade sources said.

China’s diesel exports in March were around 2.34 million tonnes, the highest since April 2020, while diesel exports from India rose to a two-month high of 2.36 million tonnes last month, Refinitiv Oil Research assessments showed.

Cash discounts for jet fuel narrowed to 62 cents per barrel to Singapore quotes on Thursday. Differentials were at a 65 cent discount a day earlier.

The April crack for 500 ppm Gasoil is higher at $4.90 /bbl with the 10 ppm crack at $ 5.95 /bbl. The regrade is at -$ 1.45 /bbl. 

The May crack for 500 ppm Gasoil is at $5.65 /bbl with the 10 ppm crack at $ 6.65 /bbl. The regrade is at -$ 1.45 /bbl. 

Click Here for a graphical depiction of Global Distillate stocks by region.

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) refining margin and prompt month time spread firmed on Monday, after hitting multi-month lows in the previous week.

The prompt-month VLSFO crack was at $11.55 a barrel above Dubai crude prices on Monday, up from a near three-month low of $11.20 a barrel on Wednesday, data from Refinitiv Eikon showed.

Similarly, the prompt-month time spread rose to parity on Monday, up from a contango of minus 75 cents a tonne in the previous session – its lowest level since late-Deccember, the Refinitiv data showed.

Overall floating storage inventories in the Malacca Strait jumped 24% higher in the week to March 31, led by an increase in IMO-compliant VLSFO volumes, according to data intelligence firm Kpler.

The April crack for 180 cst FO is higher at  -$4.00 /bbl with the visco spread at $1.05 /bbl.

The May crack for 180 cst FO is at  -$3.60 /bbl with the visco spread at $1.00 /bbl.

Click Here for a graphical depiction of Fuel Oil stocks by region.

No fresh action today. Should the Jap. Nap – Dubai crack rise above $ 2.00 per bbl, we will lay on a hedge.

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.

Disclaimer : All the views are the author’s personal views. These do not constitute an advice to buy or sell any commodity

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