Crude Oil
Oil prices tumbled on Thursday on doubts that a record oil supply cut would be enough to offset the collapse in global fuel demand caused by the coronavirus pandemic.
Brent crude futures fell $ 1.36 to settle at $ 31.48 /bbl. WTI futures fell $ 2.33 to $22.76 a barrel.
After a week-long marathon of bilateral calls, OPEC+ members have agreed to cut production by a record large 9.7 mb/d from May 1. The U.S., Brazil and Canada will contribute another 3.7 million barrels on paper as their production declines and other G20 states will contribute 1.3 million. Mexico won a diplomatic victory as it will only cut 100,000 barrels — less than its pro-rated share, having blocked the deal since the plan was first revealed on Thursday.
Asia Pacific oil refineries are finding that processing cuts are not keeping pace with sharp drops in fuel margins, with analysts expecting Asia refining run cuts at 2-2.7 MB/D in Q2’20, while global product demand is expected to fall 22.5 MB/D YoY in Apr’20.
Railroads are clamping down on rising demand from oil companies to store crude in rail cars due to safety concerns, sources said, even as the number of places available to stockpile oil is rapidly dwindling.
China’s factory gate prices fell 1.5% in Mar’20 YoY, data showed on Friday, marking the sharpest decline in five months while consumer inflation rose 4.3% in Mar’20 YoY, the slowest since Oct’19.
US energy firms cut oil rigs for a 4th week in a row to the lowest since Dec’16, cutting 58 rigs to total 504 (-329 YoY) with oil futures down over 50% since the start of the year after Saudi Arabia and Russia cut prices and boosted output in a battle for market share.
Money managers raised their net long US crude and natural gas futures and options positions by 4,089 contracts to 175,223 in the week to 7 Apr’20, the US CFTC said on Friday.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 88,502 (+25,748 over the long weekend) yesterday, with the total number of confirmed infections at 1,853,327 (+334,608 over the long weekend). (Click here for details).
Naphtha
Asia’s naphtha crack fell and persisted near a 12-year low. The crack value was down by almost 3% to a discount of $64.33 a tonne to Brent crude.
The May crack has improved to -$8.10 / bbl.
Gasoline
Asia’s gasoline crack hit a new low for a second straight day on Thursday, as supplies increased while demand continued to fall due to lockdowns seeking to curb the coronavirus from spreading. The gasoline crack discount rose to $12.51 a barrel to Brent crude from $12.38 in the previous session.
The May crack has weakened to -$7.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash discounts for jet fuel slumped on Thursday to a fresh low in more than a decade, while the prompt month spread widened its steep contango structure.
Cash discounts for jet fuel widened to $3.22 per barrel to Singapore quotes on Thursday, a level not seen since August 2008. They were at a discount of $2.99 per barrel a day earlier.
The April/May time spread for the aviation fuel in Singapore widened to trade at a discount of $3.50 per barrel on Thursday, compared with minus $2.80 a barrel on Wednesday.
Cash discounts for 10 ppm gasoil widened to $1.67 per barrel to Singapore quotes on Thursday, the biggest discounts since Singapore’s benchmark was shifted to 10ppm gasoil in January 2018, from 500ppm earlier. They were at a discount of $1.65 a barrel in the previous session.
The May crack for 500 ppm Gasoil has improved to $5.45 /bbl with the 10 ppm crack at $ 7.80 / bbl. The regrade is at -$ 6.65 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO prompt-month time spread was at its narrowest in four sessions on Thursday, gaining amid falling residual fuel inventories in the Singapore trading and storage hub.
The April/May time spread for VLSFO was at a discount of $8.75 per tonne, compared with minus $10 a day earlier.
The May crack for 180 cst FO has eased to -$1.65 /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.