Crude Oil
Oil prices slumped on Monday after Saudi Arabia and Russia delayed a meeting of oil producers aimed at resolving growing worldwide oversupply..
Brent crude futures fell $ 1.06 to settle at $ 33.05 /bbl. WTI futures rose $2.26 to $26.08 a barrel.
The OPEC+ group is working on a deal to cut production by about 10% of world supply, or 10 mbpd, but members states want that to be a global effort, one that would pull in nations that do not normally restrict supply of private oil companies, particularly world production leader the United States.
Norway has been invited to and is considering attending a meeting of top oil producers on 9 Apr’20 as an observer, and would join in with production cuts if there was broad support to do so, the country’s oil ministry said on Monday.
The IMF on Monday cited limited but encouraging signs of recovery in China, the first country to suffer the brunt of the COVID-19 pandemic, but said it could not rule out a resurgence of the pandemic in China and elsewhere.
Japan is set to announce a state of emergency on Tuesday for the capital Tokyo and six other prefectures and finalise a massive stimulus package worth 108 trillion yen ($990 billion), equal to 20% of Japan’s economic output.
Money managers were net sellers of 19 MB in the six most important futures and options contracts in the week ending on 31 Mar’20, initiating 40 MB of new purchases as well as 59 MB of fresh sales, according to ICE and CFTC data.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 74,702 69,459 (+4,243 DoD) yesterday, with the total number of confirmed infections at 1,346,974 1,273,720 (+73,254 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack hovered near a 12-year low of a discount of $48.58 a tonne as supplies are expected to build up. More than 2.3 million tonnes of naphtha were provisionally booked for Asia arrival in May.
Freight rates for smaller long-range (LR) vessels to move naphtha and other clean oil products from the Middle East to Japan have hit near 12-year highs, driven by a demand surge for floating storage to combat oversupply.
The May crack has slumped further to -$9.70 / bbl.
Gasoline
Asia’s gasoline crack sank to a discount of $10.96 a barrel on Monday, its lowest since Reuters started tracking the data in September 2008. Worldwide lockdowns to limit the spread of the coronavirus have crushed petrol demand, making gasoline the worst hit oil product in terms of returns to refiners.
The May crack has improved to -$7.55 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel widened to $3.07 per barrel to Singapore quotes on Friday, a level not seen since August 2008. They were at a discount of $3 on Friday.
Cash discounts for 10 ppm gasoil widened to $1.36 per barrel to Singapore quotes on Monday, the biggest discounts since Singapore’s benchmark was shifted to 10ppm gasoil in January 2018. They were at a discount of $1.12 a barrel on Friday.
The May crack for 500 ppm Gasoil has is marginally better at $6.00 /bbl with the 10 ppm crack at $ 7.00 / bbl. The regrade is at -$ 7.00 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO market kicked off the week on a slightly firmer note as cash differentials, time spreads and crack values recovered from record lows on Friday.
The VLSFO cash discount firmed to minus $7.89 a tonne to Singapore quotes on Monday, up from a record low of minus $10.09 a tonne on Friday.
The April-May time spread also narrowed its contango structure to minus $9.75 a tonne from a more than six-month low of minus $10 a tonne on Friday.
Similarly, the front-month VLSFO crack to Brent crude rose to $5.02 a barrel on Monday from a record low of $4.74 a barrel on Friday.
The May crack for 180 cst FO has improved to -$3.10 /bbl with the visco spread at $1.00 /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.