Crude Oil
Oil prices fell to their lowest level since December 2018 on Monday on weaker Chinese demand in the wake of the coronavirus outbreak. Brent futures fell $1.20 to settle at $53.27 a barrel. WTI crude futures fell 75 cents to settle at $49.57 a barrel.
Brent futures registered their lowest close since Dec. 28, 2018, while WTI registered their lowest close since Jan. 7, 2019. That keeps both Brent and WTI in oversold territory for 13 days and 14 days, respectively, their longest bearish streaks since November 2018. The premium of the Brent front-month over the same WTI contract , meanwhile, fell to its lowest level since August 2019.
The death toll from the coronavirus in mainland China rose to 1,017 (+108 DoD) at the end of Thursday. Across China, the total number of confirmed infections was 42,708 (+2,473 DoD).
China’s crude oil and natural gas imports have tumbled, as most Chinese refiners have significantly cut operations while import terminals slash orders for new shipments and some have declared force majeure. PetroChina plans to reduce its planned crude throughput by 320 KB/D this month, which is equivalent to about 10% of its average production rate of around 3.32 MB/D as the new coronavirus hits fuel demand, an official at the state refiner told Reuters on Monday.
Chinese President Xi Jinping said on Monday the government would prevent large-scale layoffs amid the coronavirus outbreak, Chinese state television reported, as he appeared among the public for the first time since the epidemic started. Beijing has orchestrated support for its companies and financial markets in the past week and investors are hoping for more stimulus to lift the world’s second-biggest economy. More than 300 Chinese companies are seeking bank loans totaling at least 57.4 billion yuan ($8.2 billion) to help to soften the impact of the coronavirus outbreak, two banking sources said.
The US President’s proposed $4.8 trillion budget includes a proposal to sell 15 MB from the SPR and to selloff the 1 MB of Northeast Gasoline Supply Reserve. However, this is widely viewed as an outline of administration priorities and is unlikely to be taken up by Congress.
Naphtha
No fresh news on the Naphtha markets.
The March crack has improved to – $ 1.30 / bbl.
Gasoline
Asia’s gasoline crack rose for the third straight session on Monday, reaching a near three-month high of $9.29 a barrel, as focus on shrinking supplies pushed the value higher.
State refiners and teapot refineries in China have either cut runs or are planning to slash throughput due to demand destruction caused by the coronavirus. Teapot refineries in Shandong have cut operations by 30%-50% to less than half of their capacity, a level not seen since at least 2015.
The March crack has improved to $9.80 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for gasoil with 10 ppm sulphur content rose by a cent to 62 cents per barrel to Singapore quotes on Monday.
The February/March time spread for the benchmark gasoil grade in Singapore narrowed on Monday to trade at a premium of 65 cents a barrel, 5 cents lower from Friday.
Cash differentials for jet fuel flipped back to a narrow premium of 5 cents a barrel to Singapore quotes on Monday, compared with a discount of 13 cents a barrel on Friday.
The March crack for 500 ppm Gasoil has dropped to $11.65 /bbl with the 10 ppm crack at $ 12.30 / bbl. The regrade is at -$ 1.45 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The premium for 0.5% VLSFO for near-term swaps over later-dated contracts narrowed in Asia on Monday on concerns that the spread of coronavirus could weigh on economic and trade activity, hurting demand. The backwardation also shrank on expectations for falling crude oil demand from China, the world’s second-largest oil consumer. The front-month spread is now at its lowest since Dec. 23 and was at $11 a tonne on Friday.
The March 180 cst crack has jumped to -$ 9.00/ bbl with the visco spread at $ 1.40 /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.