Crude Oil
Oil prices gained more than 2% on Wednesday as worries eased about demand declining due to the spread of coronavirus cases in China. Brent futures rose $1.37 to settle at $59.712 a barrel. WTI crude futures settled $1.24 higher at $53.29 a barrel.
Wall Street reached new highs on optimism China would stimulate its economy and counteract the impact of the outbreak. China is expected to cut its benchmark lending rate on Thursday to limit damage from business shutdowns and travel curbs.
S&P Global Ratings said it expected the virus would deliver a “short-term blow” to economic growth in China in the first quarter, echoing findings by the International Energy Agency.
There were indications of supplies tightening as the United States moved to cut off more Venezuelan crude from the market. The oil market price structure is also showing signs that prompt demand for oil is picking up, as the front-month Brent futures market is moving deeper into backwardation.
OPEC and its allies will meet in Vienna on 5-6 Mar’20, officials confirmed Wednesday, formally abandoning plans to hold an earlier summit to confront the coronavirus’ impact on oil markets.
As of yesterday, the total count of confirmed Covid 19 cases was 75,726 (+516 DoD) with 2,128 deaths from the virus. Out of the 75 odd thousand confirmed cases, 16,433 have been reported as recovered from the attack. The growth factor in daily cases reported is the lowest ever at 0.28 which is an indication that virus appears to be under control.
Markets are expected to respond positively to this development.
api data
While the API data revealed a larger than expected build for crude, the product draws should be supportive for pice.
Naphtha
Asia’s naphtha crack recovered from a 4-1/2-month low on Wednesday, rising 8% to a three-session high of $64.05 a barrel, with demand for first-half April cargoes emerging, although spot premiums fell on weak economic outlook and ample inventories.
The March crack has improved to – $ 2.55 / bbl.
Gasoline
Asia’s gasoline crack also rebounded from a 2-1/2-week low to reach a two-session high of $7.04 a barrel. Light distillate stocks in Fujairah dropped by 632 kb to 7.34 million tonnes in the week to 17th February, data from S&P Global-Platts showed.
The March crack is higher at $8.00 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil dropped to 40 cents a barrel to Singapore quotes, the lowest since Jan. 31. They were at a premium of 49 cents a barrel on Tuesday.
Cash discounts for jet fuel widened to 21 cents per barrel to Singapore quotes, compared with a discount of 13 cents per barrel a day earlier.
Jet cracks have dropped around 15% this month due to the impact of the Covid 19 virus.
Middle distillate stocks in Fujairah dropped by 290 kb to 2.66 million tonnes in the week to 17th February, data from S&P Global-Platts showed.
The March crack for 500 ppm Gasoil dropped further to $9.80 /bbl with the 10 ppm crack at $ 10.70 / bbl. The regrade is at -$ 1.15 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The contango structure in Asia’s front-month 0.5% VLSFO time spread narrowed on Wednesday after hitting a near three-month low in the previous session. The front-month time spread rose to minus $1.25 a tonne, up from minus $2.25 on Tuesday. Bunker demand typically slows during China’s Lunar New Year holiday. But this year, it has failed to recover after the break as the virus outbreak there slowed trading activity.
Fuel oil inventories in Fujairah jumped 1.074 (9%) to a 12-week high of 12.95 million barrels in the week to Feb. 17. S&P Global Platts data showed. The weekly fuel oil inventories at Fujairah were 58% higher than the year-ago levels. Fuel oil stocks have averaged 10.63 million barrels so far in 2020.
The March 180 cst crack has dropped to -$ 8.85/ 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.