Crude Oil
Oil prices tumbled nearly 3% on Monday as a fast-spreading new coronavirus strain sparked worries about a slower recovery in fuel demand.
Brent crude futures for February settled $1.35 lower at $50.91 a barrel, while the Jan WTI futures expired $1.36 lower at $47.74 a barrel. The more active February future fell $ 1.27 to $ 47.97 per barrel.
Both contracts had lost as much as $3 earlier in the session, their biggest daily drop in six months. The strength in the U.S. dollar also weighed on oil markets.
China has issued the first batch of crude oil import quotas for non-state companies at 122.59 MMT in 2021, two sources with knowledge of the matter said on Monday, up 18% from the first round for 2020.
Nigeria’s NNPC raised Jan’21 OSPs for most of its key export crude grades for the second month in a row, with its flagship Bonny Light and Qua Iboe grades increased by $0.43/bbl and $0.35/bbl, respectively.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 1,699,511 (+8,899 DoD) yesterday. The total number of active cases rose by around 40,000 over the weekend to 21.42 million. (Click here for details).
Apart from the UK, the new virus strain has already been detected in other countries, including Australia, the Netherlands and Italy.
Naphtha
Asia’s spot naphtha market stayed firm on Monday because of lower supplies from Algeria and as benzene margins have improved.
Naphtha exports from Algeria’s Sonatrach this month have been delayed as bad weather disrupted loadings at Skikda port, and this had reduced western arbitrage supplies to the east. Robust petrochemical margins and the expected resumption of LG Chem’s cracker in the first quarter have also supported prices.
On Friday, Hanwha Total bought naphtha cargo with minimum 80% paraffinic content at a premium of $17-$18 a tonne for first half of February delivery.
Meanwhile, spot values for heavy naphtha are also improving as profits from making benzene have jumped to about $200 per tonne from near parity earlier.
Despite robust demand, refiners’ cracks from naphtha and gasoline tumbled along with global oil prices on Monday.
The January crack is lower at $0.75 /bbl.
Gasoline
No fresh news on the Asian gasoline markets.
The January crack is steady at $3.05 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for gasoil with 10 ppm sulphur content narrowed by a cent to 4 cents a barrel to Singapore quotes, the smallest discount since differentials plunged into a negative territory on Aug. 11.
Refining margins, also known as cracks, for 10 ppm gasoil were at $6.25 a barrel over Dubai crude during Asian trading hours, down from a more than four-month high of $6.54 per barrel on Friday. Cracks for the benchmark gasoil grade in Singapore have more than doubled in the last two months, but they are still currently about 57% lower than their historical average for this time of the year.
The January crack for 500 ppm Gasoil is lower at $5.35 /bbl with the 10 ppm crack at $ 6.15 / bbl. The regrade is at -$ 0.85 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s cash premium for 380-cst high-sulphur fuel oil HSFO rose to $1.95 per tonne to Singapore quotes, up 3 cents from Friday.
The Jan/Feb time spread for the 380-cst HSFO in Singapore traded at a premium of $1.75 per tonne on Monday, compared with $2 a tonne at the end of last week.
The 380-cst high-sulphur fuel oil (HSFO) barge crack for January, which has gained 7% in the last week, slipped to a discount of $6.10 a barrel to Brent on Monday.
Meanwhile, the VLSFO crack for January slipped to $9.99 per barrel against Dubai crude during Asian trading hours, down from $10.48 a barrel on Friday.
Cash differentials for Asia’s 0.5% VLSFO were at a discount of $1.40 a tonne to Singapore quotes on Monday, as against a discount of $1.44 per tonne on Friday.
The January crack for 180 cst FO is lower at -$1.60 /bbl with the visco spread at $0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity 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.