Crude Oil
Oil futures strengthened late in the session on Wednesday, buoyed by hopes that OPEC and its allies will strike a production cut agreement on Thursday.
Brent crude futures rose 97 cents to settle at $ 32.84 /bbl. WTI futures rose $1.46 to $25.09 a barrel.
Brent turned negative briefly, after U.S. government data showed crude inventories last week soared by a record 15.2 million barrels, even as production was cut by 600 kbpd to 12.4 million bpd.
Supertanker freight rates have fallen after last week’s highs as industry participants await the outcome of a meeting of oil producers on Thursday before making further bookings, industry sources said.
India will divert 19 MB of Gulf oil from state-run firms to SPRs skipping direct purchases from producers to help refiners get rid of extra oil as their storage is full, three sources said.
Russia is willing to cut crude output by 1.6 MB/D from Q1’20 levels, if other producers cut a similar proportion of their output, Russia’s Tass news agency reported Wednesday. Russia’s crude and condensate output in Q1’20 was around 11.305 MB/D.
EIA changes
U.S. crude inventories rose as refiners slashed runs and the delivery hub for WTI at Cushing, Oklahoma, posted a record weekly build of 6.4 million barrels. Gasoline demand fell to record low levels of 5.07 mbpd. Distillate levels stayed constant as the production of distillate stayed the same notwithstanding the slash in run rates to 75.2%.
In these turbulent times, the material balance statement is also showing huge variances. The most notable among them being that, given the current levels of most parameters, gasoline stocks should have reduced rather than the humongous build reported. Also, distillate stocks should have built more than reported. It is hard to reconcile them but, for now, we feel that we have to take the reported stock levels as correct.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 88,502 82,080 (+6,422 DoD) yesterday, with the total number of confirmed infections at 1,518,719 (+87,013 DoD). (Click here for details). The number of deaths yesterday are lower than the previous day.
Naphtha
Asia’s naphtha crack persisted near a 12-year low of a discount of $62.48 a tonne to Brent crude due to growing supplies. A lack of demand for the fuels in Europe would result in more cargoes being pushed to the East.
The May crack has improved -$8.65 / bbl.
Gasoline
Asia’s gasoline crack hit a new low on Wednesday at a discount of $12.38 a barrel to Brent crude, as demand continued to sink as restricted movement measures to contain the coronavirus’ spread continued.
The May crack has improved to -$7.25 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel were at $2.99 per barrel to Singapore quotes on Wednesday, compared with a discount of $2.90 per barrel a day earlier. On Monday, the discounts had hit $3.07 per barrel, a level not seen since September 2008.
The prompt-month time spread for the aviation fuel in Singapore widened on Wednesday to trade at a discount on $2.80 per barrel.
Cracks for jet fuel, however, edged up to $1.83 a barrel below Dubai crude during Asian trade on Wednesday, compared with minus $3.01 per barrel on Tuesday.
Cash discounts for 10 ppm gasoil widened to $1.65 per barrel to Singapore quotes on Wednesday, the biggest discounts since Singapore’s benchmark was shifted to 10ppm gasoil in January 2018. They were at a discount of $1.55 a barrel on Tuesday.
Middle-distillate inventories in Fujairah rose 9.8% to 2.5 million barrels in the week to April 6, data via S&P Global Platts showed. Stocks of middle distillates in the Fujairah oil hub have averaged 3 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019. The weekly Fujairah middle distillate stocks were about 19% higher than a year earlier.
The May crack for 500 ppm Gasoil has improved to $4.85 /bbl with the 10 ppm crack at $ 7.20 / bbl. The regrade is at -$ 6.60 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO cash differential fell on Wednesday, weighed down by weaker deal values and sluggish demand. The VLSFO cash discount fell by $2.55 a tonne to minus $9.39 a tonne to Singapore quotes on Wednesday, nearing Friday’s record low of minus $10.09 a tonne.
Fuel oil stocks held in Fujairah to a record high of 15.45, gaining 959 kb (7%) from the previous week. Fujairah fuel oil stocks were last higher on Nov. 18 at 15.43 million barrels.
The May crack for 180 cst FO has improved to -$1.20 /bbl with the visco spread at $1.05 /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.