Crude Oil
Panic in the oil markets extended into a second day and seems to have cast a gloom that is not likely to lift any time soon.
While Brent futures settled $6.24 lower to settle at $25.57 /bbl losing about 24% of its value. This is its lowest settle since February, 2002. The June WTI contract fell $8.86, or 43%, to settle at $11.57. The May contract, which expired on Tuesday, rebounded from its deep dive into negative territory, rising to $10.01 from the previous day’s settlement at minus $37.63.
Monday and Tuesday have been two of the most turbulent days in the history of oil trading, as investors confronted the reality that worldwide supply will overwhelm demand for months or even years. Further, current production cuts to offset that glut are nowhere near sufficient.
After Monday’s trade, when the front-month May U.S. contract fell into negative territory for the first time in history, Tuesday set a new milestone as more than 2 million contracts for U.S. crude for delivery in June changed hands, the busiest day in history, according to exchange operator CME Group.
China is set to issue more crude oil import quotas to non-state refiners in its second batch of allowances for 2020, several sources told Reuters on Tuesday. China’s Ministry of Commerce will issue quotas totalling 53.88 million MT (393.32 MB).
ADNOC has informed term buyers it will reduce the supply of crude in May’20 for all four crude grades, cutting the supply of its Murban and Upper Zakum crude by 15%, and reduce the supply of its Umm Lulu and Das crude by 5%.
api data
U.S. crude inventories rose by 13.2 million barrels in the week to April 17 to 500 million barrels, data from the API showed on Tuesday. Gasoline and distillate inventories also rose sharply although gasoline rose less than expected.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 177,641 170,436 (+7,205 DoD) yesterday, with the total number of confirmed infections at 2,557,181 (+75,894 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack turned positive for the first time this month on Tuesday, helped by a historic price plunge in oil prices. The naphtha crack hit a premium of $18.80 a tonne to Brent crude versus a small discount in the previous session.
The May crack has improvded to -$0.90 / bbl.
Gasoline
Asia’s gasoline crack, in contrast to that of naphtha, fell to a discount of $6.01 a barrel to Brent versus a discount of $5.42 a barrel in the previous session.
The May crack has dropped to -$4.30 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10 ppm gasoil were at a discount of $2.82 per barrel to Singapore quotes on Tuesday, compared with a discount of $2.78 a barrel on Monday.
The May/June time spread for 10 ppm gasoil in Singapore widened its contango structure on Tuesday to trade at a discount of $2.45 a barrel.
The gasoil EFS was around minus $21 per tonne on Tuesday.
Cash discounts for jet fuel were at $4.06 per barrel to Singapore quotes on Monday, the widest discounts since November 2005. They were at a discount of $3.60 per barrel a day earlier.
The May crack for 500 ppm Gasoil has dropped to $5.50 /bbl with the 10 ppm crack at $ 7.70 / bbl. The regrade is at -$ 5.60 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 0.5% VLSFO crack against Brent crude climbed to a three-week high of $8.75 a barrel on Tuesday, up from $8.44 in the previous session.
Similarly, the front-month 380-cst HSFO barge crack jumped to minus $10.40 a barrel, from a near six-week low of minus $11.97 a barrel hit on Monday.
\The Maritime and Port Authority of Singapore (MPA), home to the world’s top marine refuelling hub, said it has awarded two new bunker supplier licences to Mercuria’s Minerva Bunkering and Trafigura’s TFG Marine. The licences are the first to be issued by the port regulator since 2017, bringing the total number of licensed bunker suppliers to 45 in Singapore, and come after the MPA tightened its criteria for applicants.
The May crack for 180 cst FO has jumped up back to -$0.20 /bbl with the visco spread at $1.00 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
We shall sell the May FO crack at -$0.20 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.