Crude Oil
Oil prices were mixed on Monday, as the production-cut deal inked by OPEC+ was not enough to assuage existing worries about the demand destruction.
While Brent futures rose 26 cents to settle at $31.74 a barrel, WTI crude futures slipped 35 cents to settle at $22.41, its lowest since April 1.
Saudi Arabia, on Monday, also set its May official selling prices (OSP) for crude, selling oil to Asia more cheaply and keeping prices flat for Europe while raising them for the United States. Outside of OPEC+, Canada has signalled a willingness to cut and Norway said it would decide about its cut “in the near future.”
The United States, where antitrust legislation makes it hard to act in tandem with groups such as OPEC, has said that low prices mean its output would already fall by as much as 2 million bpd this year without planned cuts.
Oil markets continued to signal near-term oversupply, despite optimism over the longer-term impact of the OPEC+ cuts. Front-month U.S. crude futures for delivery in May traded as much as $6.96 below futures for delivery in June, the biggest gap since February 2009. The contango in that spread signaled concerns that Cushing, the delivery point for benchmark U.S. crude futures, might fill up in coming weeks.
Shell lifted a force majeure on exports of Nigeria’s Forcados crude oil after the reopening of the Trans Forcados pipeline by operator Heritage Energy Operational Services Limited, a spokeswoman for the Shell said on Monday.
Russia hails oil deal it says will save millions of US jobs. Moscow’s obligations under the deal are to cut its output to 8.5 MB/D from May’20 to Jun’20, bringing it to the lowest level since 2003. Oman on Monday instructed oil producers operating in the sultanate to cut crude oil output beginning 1 May’20. However, it has not been decided how these cuts will be distributed among the companies, a source told S&P Global Platts.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 119702 (+31,200 DoD) yesterday, with the total number of confirmed infections at 1,925,224 (+71,897 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack was at a four session high on Monday although the value has remained in the negative zone since the start of April. The crack value was at a discount of $54.40 a tonne versus a discount of $64.33 in the previous session.
The May crack has improved to -$6.95 / bbl.
Gasoline
Asia’s gasoline crack hit a fresh record low on Monday, this time at a discount of $12.97 a barrel to Brent crude versus a discount of $12.51 a barrel in the previous session, as oversupply persisted due to lack of demand.
The May crack has improved to -$7.50 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for 10 ppm gasoil widened to $1.99 per barrel to Singapore quotes on Thursday, a fresh low since Singapore’s benchmark was shifted to 10ppm gasoil in January 2018. They were at a discount of $1.67 a barrel on Thursday.
Cash discounts for jet fuel narrowed to $2.97 per barrel to Singapore quotes on Monday. The jet cash differentials were at a discount of $3.22 per barrel on Thursday, a level not seen since August 2008.
India’s fuel demand slid 17.8% in March compared with the same month last year, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed on Monday. Consumption of fuel, a proxy for oil demand, totalled 16.08 million tonnes, the data showed. Consumption of diesel, which is widely used for transportation as well as for irrigation needs in India, was down about 24% in March year-over-year at 5.65 million tonnes. India’s domestic consumption pattern typically impacts the volume of the country’s exports, which in turn affects the overall supply in the wider Asian markets. Domestic jet fuel sales in March were at about 480,000 tonnes, compared with 690,000 tonnes in February, and 720,000 tonnes in March 2019.
The May crack for 500 ppm Gasoil has improved to $5.55 /bbl with the 10 ppm crack at $ 7.90 / bbl. The regrade is at -$ 6.15 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO crack to Brent crude dropped to a fresh record low on Monday. Asia’s front-month VLSFO crack to Brent crude fell to $4.38 a barrel, its lowest since records began in July.
Singapore bunker fuel sales rose expectedly in March, defying expectations of lower overall bunker sales volumes because of sluggish spot demand and slowing maritime trade due to the pandemic. Singapore marine fuel sales jumped unexpectedly to a two-month high of 4.322 million tonnes in March, up 11% from February and 6% higher from the same time last year, data from the Maritime and Port Authority of Singapore (MPA) showed on Monday.
The number of vessels calling at Singapore for bunkers jumped to a two-month high of 3,557 in March, up from 3,188 in February and 3,320 last year, the MPA data showed.
Sales of IMO-compliant low-sulphur fuels represented 82% of the overall March sales volumes totalling 3.54 million tonnes, up from 3.258 million tonnes in February that made up 84% of the overall sales that month.
The May crack for 180 cst FO has strengthened to -$0.30 /bbl with the visco spread at $1.00 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
We will lay on a hedge for 180 cSt – Dubai for May-20 at current levels of -$0.30 /bbl
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.