Crude Oil
Oil prices jumped about 2% on Wednesday on media reports that a vaccine for the coronavirus would be developed soon. Brent futures rose $1.32 to settle at $55.28 a barrel. WTI crude futures rose $1.14 to settle at $50.75 a barrel.
The death toll from a new coronavirus in mainland China to 564 (+73 DoD) on Thursday, its third consecutive record daily rise, with 10 more cases reported on cruise ship off Japan. Across China, the total number of confirmed infections was 28,060 (+3,697 DoD)
The World Health Organization played down the media reports about the media vaccine, saying there were “no known effective therapeutics” against the virus. Hundreds of experts will meet in Geneva next Tuesday and Wednesday to set research and development priorities for coronavirus drugs, diagnostics and vaccines to combat the outbreak, the WHO said on Wednesday.
The US President was acquitted on Wednesday in his US Senate impeachment trial, saved by fellow Republicans who rallied to protect him nine months before he asks voters in a deeply divided America to give him a second White House term.
India’s state-owned Indian Oil Corp (IOC) has signed a deal with Russian oil major Rosneft giving it an option to buy up to 2 million tonnes, or 40 KB/D of crude in 2020, the Indian oil minister said on Wednesday, as India has been diversifying its sources of crude oil imports.
Saudi Arabia has cut the Mar’20 OSP for its Arab Light grade for Asian customers by 80c/bbl, setting it at a premium of $2.90 versus the Oman/Dubai average, state oil company Saudi Aramco said on Wednesday.
doe data
The DOE data continues appeared mildly supportive even as crude stocks built due to draws in both gasoline and distillate stocks. Refiner runs increased mildly from 87.2% to 87.4%. However, refiners seem to have switched into gasoline production mode as it increased by around 9% while distillate production was more or less constant.
Our material balance statement (below) suggests that crude stocks may well have been drawn upon thanks to the small drop in production.
The draw in product stocks appears to have been exaggerated with the possibility that gasoline stocks may well have built.
Naphtha
Asia’s naphtha crack hit a one-week low of $78.10 a tonne on Wednesday as demand remained weak, with most petrochemical makers maintaining naphtha cracker run cuts.
Several petrochemical producers across Asia had turned to run cuts either in January or December to combat high feedstock costs of naphtha, used for making polymers. Overall, China’s demand for naphtha was down 30% month-on-month to 400 KT in January, as the virus has impacted almost all aspects of life.
Some of cargoes expected for January arrival are now seen landing in Asia this month.
The February crack has dropped to – $ 2.05 / bbl. The March crack is at -3.00
Gasoline
Asia’s gasoline crack fell nearly 9.9% to a three-session low of $6.58 a barrel in an extended choppy market, from a near two-month high in the previous session. Light distillate inventories in Fujairah rose by 221 KB to 7.33 million barrels in the week to February 3 as per data from S&P Global, Platts.
The February crack is higher at $7.35 /bbl.
The March crack is at $7.50 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash premiums for 10 ppm gasoil slipped to 74 cents per barrel to Singapore quotes, down 3 cents from the previous session. Tuesday’s cash premiums were the highest since Dec. 31.
Cash premiums for jet fuel fell to 10 cents per barrel over Singapore quotes on Wednesday, down from 15 cents per barrel a day earlier.
Middle-distillate inventories in Fujairah Oil rose 1.5% from a week earlier to 4.1 million barrels in the week to Feb. 3, data via S&P Global Platts showed.
The February crack for 500 ppm Gasoil has dropped to $11.60 /bbl with the 10 ppm crack at $ 12.25 / bbl. The regrade is at -$ 1.75 /bbl.
The March crack for 500 ppm Gasoil is at $11.55 /bbl with the 10 ppm crack at $ 12.20 / bbl. The regrade is at -$ 1.20 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO market extended previous sessions losses on Wednesday. The front-month VLSFO crack sank to a more than two-month low of $16.42 a barrel on Wednesday, while the VLSFO-HSFO price spread fell to $178 per tonne, its lowest in over four months.
Residual fuel oil inventories in Fujairah soared by 2.412 million barrels (23% ) to 12.86 million barrels, a 10-week high, in the week Feb. 3, S&P Global Platts data showed.
The February 180 cst crack has dropped to -$ 9.55/ bbl with the visco spread at $ 0.85 /bbl.
The March 180 cst crack is at -$ 10.05/ bbl with the visco spread at $ 1.30 /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.