Crude Oil
Crude oil prices settled below $30 a barrel on Tuesday as the coronavirus pandemic slowed economic growth and oil demand while Saudi Arabia and Russia kept up their battle for market share.
Brent crude futures fell $ 1.32 to settle at $28.73 a barrel. WTI futures fell $ 1.75 to settle at $26.95 a barrel.
This is the first time that Brent has settled below $30 per barrel since 2016.
WTI crude at East Houston, a key price of oil delivered to Houston for exports, fell below the futures price for the first time on record.
Amid the fall in demand because of the pandemic, Saudi Arabia and Russia remain embroiled in a price war that erupted after the two top producers failed to agree to extend supply curbs to support the market.
The Saudi energy ministry said on Tuesday that the kingdom’s crude exports are set to rise in coming months to more than 10 million barrels per day, as it plans to use more gas for power rather than burning crude.
Brent’s premium over WTI has narrowed sharply to 67 cents a barrel, reaching levels not seen since November 2016. Brent reacts more to supply from non-U.S. producers, so the anticipated increase in output from Saudi Arabia and Russia has hit that benchmark harder than WTI.
At a global level, the death toll from the COVID-19 virus rose to 7,981 (+817 DoD) yesterday, with the total number of confirmed infections at 198,378 (+15,828 DoD). The growth factor of new cases is current at 1.00 as of Sunday. The number of cases being discovered is rising quite fast now. (Click here for details).
api data
The API showed a modest decline in crude inventories, which was a bit of a surprise. However, gasoline and distillate inventories were down sharply which, given the impact of the corona virus, is a bit unexpected. The U.S. Energy Department releases official government figures on Wednesday.
Naphtha
Asia’s naphtha crack rebounded from a six-month low hit in the previous session to touch a two-session high of $40.25 a tonne on Tuesday, as more buyers came forward to buy cargoes.
The April crack has dropped to -$3.65 / bbl.
Gasoline
Asia’s gasoline crack remained at a discount after the value turned negative for the first time in 13 months on Monday. The crack value was at a narrower discount of 60 cents a barrel versus 78 cents in the previous session.
Gasoline cracks in key regions of Asia, Europe and the United States are all in discounts this week as the coronavirus resulted in limited road travels as people stayed home.
Northwestern European gasoline refining margins had dropped to around a discount of $6.6 a barrel on Monday, their lowest since January 2009. U.S. gasoline refining margins fell a whopping 95% on Monday – briefly turning negative – to settle at 28 cents per barrel, their lowest since December 2008.
Where pump prices are concerned, China announced on Tuesday it will cut the retail ceiling prices for gasoline by 1,015 yuan ($144.79) per tonne and diesel by 975 yuan, the biggest reduction since Beijing launched the pricing mechanism in 2013.
The April crack has recovered to -$2.25 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Refining margins or cracks for jet fuel slumped on Tuesday to $3.82 per barrel over Dubai crude during Asian trade, the lowest on record as per data that goes back as far as March 2009. They were at $4.71 per barrel a day earlier. The jet fuel margins have plunged this week after more countries globally imposed further travel restrictions as part of measures to slow down spread of the coronavirus.
Airlines and airports are facing a huge shock as they battle a cash crunch resulting from the coronavirus. China now accounts for less than half of those deaths, while the World Health Organization said Europe has now become the epicentre of the coronavirus pandemic.
Cash discounts for jet fuel were at 28 cents per barrel to Singapore quotes on Tuesday, compared with a discount of 35 cents per barrel on Monday.
Cash differentials for 10 ppm gasoil were at a narrow premium of 2 cents per barrel to Singapore quotes on Tuesday, compared with a discount of 1 cent in the previous session.
The April crack for 500 ppm Gasoil has improved to $8.20 /bbl with the 10 ppm crack at $ 8.85 / bbl. The regrade is at -$ 4.25 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO crack to Brent crude firmed to a two-session high on Tuesday amid tumbling crude oil prices and a slightly improved marine fuels demand this week.
The front-month crack rose to $11.19 a barrel, up from $10.35 a barrel in the previous session.
The April crack for 180 cst FO has dropped to -$3.90 /bbl with the visco spread at $1.15 /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.
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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.