Crude Oil
U.S. crude tumbled 10.7% on Friday and posted its biggest weekly decline since the 1991 Gulf War as the coronavirus epidemic dried up global demand.
Brent crude futures fell $ 1.49 to settle at $26.98 a barrel. WTI futures fell $2.69 to settle at $22.53 a barrel. The more active U.S. crude contract for May settled down $3.28 at $22.63 a barrel.
The week featured four days of massive selling as the growing pandemic kept people from driving and booking flights. U.S. crude prices notched a weekly loss of 29%, the steepest since the outset of the U.S./Iraq Gulf War in 1991. Brent crude dropped by 20%. Both benchmarks have dropped for four straight weeks.
Saudi Aramco vowed there will be no disruption in its oil and gas supplies to customers even as international borders have closed and transportation venues cut off. Aramco has pledged to supply 12.3 MB/D of crude in Apr’20 and May’20.
Russia did not seek an end to cooperation with OPEC or a sharp drop in oil prices, according to a senior Russian official, saying the Gulf nations are to blame for the crisis on global oil markets. The Russian energy minister has called a meeting with oil companies on 23 Mar’20.
US energy firms cut the most oil rigs in a week in almost a year, cutting 19 to total 664 (-160 YoY), mostly in the Permian basin as a meltdown in oil and natural gas prices due to the coronavirus outbreak has forced producers to deepen cuts in spending on new drilling.
Money managers raised their net long US crude futures and options positions by 20,341 contracts to 145,595 in the week to 17 Mar’20, the US CFTC said on Friday.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 14,654 (+4,606 over the weekend) yesterday, with the total number of confirmed infections at 337,553 (+91,941 over the weekend). (Click here for details).
As the pandemic appears to showing greater signs of spreading, more and more nations are going into shutdown. India requested a nationwide 14 hour curfew on Sunday that was mostly followed. Schools and colleges are closing down around the world.
California’s stay-at-home order from its Governor to its 40 million residents took effect midnight Thursday and is expected to further weaken the state’s demand for gasoline and diesel, sending prices lower and opening the possibility refiners will start cutting runs.
The US offer to help Iran in its fight against the new coronavirus pandemic is strange, Iran’s Supreme Leader said in a televised speech on Sunday, rejecting the US offer of help, describing US leaders as “charlatans and liars”.
Naphtha
Asia’s naphtha crack edged to a three-session high of $31.53 a tonne on Friday but also down from $32.65 a tonne at the start of the week..
The April crack has dropped to -$4.95 / bbl.
Gasoline
Asia’s gasoline crack rose on Friday, but remained firmly at a discount against Brent crude oil prices, narrowing its discount to minus $2.21 a barrel, up from a multi-year low of minus $3.38 a barrel in the previous session.
ARA gasoline stocks were down 1% to a seven-week low of 1.103 million tonnes. Gasoline stocks fell slightly as the motor fuel was exported to multiple locations in Latin America, the U.S. and West Africa.
The April crack has dropped to -$6.00 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel were at $1.10 per barrel to Singapore quotes on Thursday, the widest since February last year. They were at a discount of 63 cents per barrel on Thursday.
Cash differentials for 10 ppm gasoil were at a discount of 15 cents per barrel to Singapore quotes on Friday, compared with a discount of 16 cents on Thursday.
Gasoil stocks in ARA dropped 5.6% to 1.8 million tonnes in the week to March 19. ARA jet fuel inventories were up 16.7% at 461 KT. Compared with a year earlier, jet fuel stocks were 33.4% lower, while gasoil inventories dropped 28.7%.
The April crack for 500 ppm Gasoil has improved to $9.10 /bbl with the 10 ppm crack at $ 9.75 / bbl. The regrade is at -$ 7.45 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The cash differential for 0.5% VLSFO in Asia edged higher to minus $6.54 a tonne to Singapore quotes, up from a record low of minus $6.69 a tonne in the previous session amid weak demand and ample supplies of the marine fuel. By comparison, the cash differential was at a premium of 30 cents a tonne last week.
Residual fuel inventories at ARA jumped 31% to a near six-month high of 1.287 million tonnes in the week ended Thursday. Compared with last year, the ARA fuel oil inventories were 44% higher and above the five-year seasonal average of 1.094 million tonnes.
The April crack for 180 cst FO has again zoomed to -$1.30 /bbl with the visco spread at $1.00 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh trades 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.
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.