Crude Oil
Oil prices inched higher on Monday. Brent crude futures rose 5 cents to settle at $27.03 a barrel. WTI futures for May rose 73 cents to $23.36 a barrel.
Both benchmarks traded in negative territory until late in the session. Crude futures were slightly stronger on hopes that government and central bank stimulus might boost world economies.
US physical crude markets in Cushing, Oklahoma, on Monday signaled a prolonged period of oversupply, with prompt cash rolls sinking to the weakest in nearly a decade. Tanks in Cushing are expected to fill to capacity as early as May’20.
The six-month spread of Brent futures hit its steepest since 2009 at a discount of around $9.
Oil prices have dropped more than 60% since the start of the year, while everything from coal to copper have also been hit by the coronavirus crisis, and bond and stock markets are in rarely charted territory.
Japan’s services sector shrank at the fastest pace on record in Mar’20 and the country’s factory activity at its quickest in about a decade, with the Jibun Bank Manufacturing and Services PMI falling to 44.8 (-3.0 MoM) and 32.7 (-14.1 MoM) respectively.
The IOC has decided to postpone the Tokyo 2020 Summer Games because of the coronavirus pandemic, IOC member Dick Pound said on Monday, as a window slowly began to open that would allow the showcase to be staged next year.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 16,524 (+1,870 DoD) yesterday, with the total number of confirmed infections at 379,080 337,553 (+31,527 DoD). (Click here for details).
New Zealand is the latest country to implement shut down in part or full.
Naphtha
Asia’s naphtha crack fell to $11.28 a tonne, a near seven-month low, on Monday. The naphtha crack was at $31.53 a tonne on Friday. This is its lowest settle since Aug. 30.
The outlook for naphtha looks increasingly bleak as scheduled Asian refinery turnarounds starting this quarter.
While pockets of demand have emerged in some parts of Asia in response to the falling prices and a gradual return of Chinese manufacturing activity extensive quarantine efforts there, an abundance of supply and limited demand will continue to weigh on market sentiment.
The April crack has dropped to -$8.65 / bbl.
Gasoline
Asia’s gasoline crack resumed its decline on Monday, widening its discount to minus $4.10 a barrel against Brent crude, its lowest since the aftermath of the global financial crisis in December 2008. The gasoline crack was at minus $2.21 a barrel on Friday.
Pertamina has adjusted its gasoline purchase strategies for Apr’20 cargoes, buying them on a fixed flat price basis, deviating from its traditional practice of bidding on a floating price basis, as outright 92Ron gasoline prices tumble to an 18-year low. This is a strong form price of risk management given the low level of both crude prices and the gasoline crack.
China’s gasoline exports surged 31.5% YoY over the first two months of 2020, to 2.72 million MT as the coronavirus outbreak disrupted production and travel, denting demand for fuels within the country, data from the General Administration of Customs showed on Tuesday.
In the United States, the world’s biggest consumer of gasoline, the gasoline crack dropped 30% to a record low this week.
The April crack has dropped to -$9.20 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Asia’s cash differentials for jet fuel plunCash discounts for jet fuel were at $1.64 per barrel to Singapore quotes on Monday, the widest since January last year. They were at a discount of $1.10 per barrel on Friday. The front-month time spread for jet fuel in Singapore, which has remained in contango since the beginning of February, widened to trade at a discount of $2.59 a barrel on Monday.
The crack for jet fuel fell to minus 7 cents per barrel over Dubai crude during Asian trading hours on Monday, a level not seen in the last 11 years, according to data that goes back as far as March 2009. The jet fuel cracks were at $2.97 per barrel on Friday.
Cash differentials for 10 ppm gasoil widened their discounts to 24 cents per barrel to Singapore quotes on Monday, compared with a discount of 15 cents on Friday.
U.S. ultra-low sulphur diesel was the latest product refined from crude oil to take a hit in its cash market last week, after refiners boosted production in a bid to flee poorer margins for other products more affected by coronavirus fallout.
The April crack for 500 ppm Gasoil has improved to $9.50 /bbl with the 10 ppm crack at $ 10.10 / bbl. The regrade is at -$ 8.90 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s VLSFO front-month crack slipped to $8.82 a barrel, down from $9.71 a barrel in the previous session. This is very close to a more than six-month low of $8.47 a barrel seen in late February.
The April crack for 180 cst FO is lower at -$1.60 /bbl with the visco spread at $0.90 /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.