Crude Oil
U.S. crude oil prices spiked by 25% on Thursday, the largest single-day gain on record.
Brent crude futures rose $ 3.59 to settle at $28.47 a barrel. WTI futures rose $4.85 to settle at $25.22 a barrel.
Oil extended gains late in the day after U.S. President Donald Trump said on Thursday he would get involved in the dispute between Saudi Arabia and Russia “at the appropriate time.”
Oil’s respite came as investors across financial markets assessed the impact of massive central bank stimulus measures. Central banks have moved to mitigate the spiraling economic and financial fallout from the pandemic, with the European Central Bank kicking off a 750 billion euro ($820 billion) emergency bond purchase scheme.
The Wall Street Journal reported yesterday that the US administration was considering additional actions to support US oil producers and global oil prices, returning to policies last used in the 1970s and 80s. Internationally, the US administration is reportedly “considering intervening in the Saudi-Russian oil-price war with a diplomatic push to get the Saudis to cut oil production and threats of sanctions on Russia aimed at stabilizing markets”. Domestically, Texas regulators are reportedly considering limiting oil production for the first time in decades
At a global level, the death toll from the COVID-19 virus rose to 10,048 7,981 (+2,067 DoD) yesterday, with the total number of confirmed infections at 245,612 198,378 (+47,234 DoD). The jump in the number of both reported cases and deaths fuels cause for greater concern. (Click here for details).
Saudi Aramco will continue reducing operations at its local refineries in Apr’20 and May’20 to boost the state energy company’s potential to export crude oil, a company official said on Thursday. Exports were set to top 10 MB/D from May’20, it added.
Saudi Arabia and Iraq have said they are unable to provide freight rebates for crude oil shipments under default contract terms due to a record rise in tanker rates. Changes in supply terms may lead to cancellations of Apr’20 cargoes by buyers across the world as they were not expecting to bear transport costs in full, traders said.
Russia too plans to boost its crude oil exports and transit via Transneft pipelines in Q2’20 by 1.4% QoQ to 64.595 million KT. This is up by some 72 KB/D from the daily export quota set for Q1’20, despite Russia’s pledge to lift oil output by 200-300 KB/D, Reuters calculations show.
Naphtha
Asia’s naphtha naphtha crack edged away from a more than six-month low in the previous session, climbing 5 cents to $30.90 a tonne on Thursday..
The April crack has dropped to -$4.50 / bbl.
Gasoline
Asia’s gasoline crack extended losses on Thursday, widening its rare discount to crude to its steepest since November 2011. The crack widened its discount to Brent to minus $3.38 a barrel, down from minus $1.04 a barrel in the previous session.
Singapore onshore light distillates stocks fell by 428 kb to a three-week low of 14.164 million barrels in the week to March 18 amid higher gasoline exports, data from Enterprise Singapore showed. In the previous week, the light distillate inventories hit an 11-month high of 14.59 million barrels.
Gasoline prices have fallen further than diesel prices, in the expectation that fewer drivers will be on the roads even if truck deliveries continue.
The April crack has recovered to -$5.70 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asian refining margins for jet fuel dropped below $2 a barrel over Dubai crude on Thursday, while cash differentials plunged to their widest discounts so far this year as coronavirus continued to hammer the global aviation sector. Cash discounts for jet fuel were at 63 cents per barrel to Singapore quotes on Thursday, the widest since Nov. 19. They were at a discount of 38 cents per barrel on Wednesday.
Cash differentials for 10 ppm gasoil were at a discount of 16 cents per barrel to Singapore quotes on Thursday, as against a 1-cent discount a day earlier.
Singapore onshore middle distillate stocks rose 7.5% to a more than five-month high of 12.3 million barrels in the week ended March 18, Enterprise Singapore data showed. Weekly middle distillate inventories have averaged 11.14 million barrels so far in 2020, compared with 11.11 million barrels in 2019. Overall, onshore middle distillate inventories were 13.4% higher year-on-year.
The April crack for 500 ppm Gasoil has improved to $8.60 /bbl with the 10 ppm crack at $ 9.25 / bbl. The regrade is at -$ 5.55 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO price differential against 380-cst HSFO sank to its lowest since records began in July. The VLSFO-HSFO price spread for April fell to $78.50 a tonne on Thursday, down from $84.25 in the previous session and from $117.50 a week ago.
This came as the VLSFO cash discount also sank to a fresh record low of minus $6.69 a tonne to Singapore quotes, down from the previous low of $5.76 a tonne amid weak buying interest and lower supplier offers.
Reflecting the sluggish demand for marine fuels, Singapore’s residual fuel oil inventories rose to a two-week high in the week to March 18 despite limited net import volumes, official data showed on Thursday. Onshore fuel oil stocks rose by 296 kb to 25.28 million barrels from the previous week, data from Enterprise Singapore showed.
Residual fuel stocks were 24% higher than the year-earlier period. Singapore marine fuel sales fell to a four-month low of 3.88 million tonnes in February, down 14% from the previous month but 3% higher from last year.
For the first time in almost two years, Singapore was a net exporter of residual fuels to the UAE, sending 29,000 tonnes of the fuel.
The April crack for 180 cst FO has again zoomed to -$2.30 /bbl with the visco spread at $0.90 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
With 180 cst again zooming up in strength, we shall once again lay on fresh hedges in the contract for April, May and June.
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.