Crude Oil
Oil prices slumped by nearly 4% on Monday as the rapid spread of the Covid 19 virus in countries outside China added to investor concerns over the effect on demand for crude. Brent futures fell $ 2.20 to settle at $56.30 a barrel. WTI crude futures settled $ 1.95 lower at $51.43 a barrel.
Global equities also extended losses as worries about the impact of the virus grew, with the number of cases jumping in Iran, Italy and South Korea.
The Covid 19 virus has infected nearly 77,000 people and killed more than 2,500 in China, most of them in Hubei. South Korea’s fourth-largest city, Daegu, was increasingly isolated as the number of infections there rose rapidly. Europe’s biggest outbreak is in Italy, which reported a seventh death from the flu-like virus and 220 infections. Kuwait, Bahrain, Oman and Iraq on Monday recorded their first new coronavirus cases, all involving people who had been in Iran, which raised its toll from the disease to 12 dead and 61 infected. Nevertheless, the WHO chief Tedros Ghebreyesus said that using the word “pandemic” did not fit the facts.
At a global level, the death toll from the COVID-19 in rose to 2699 (+228 DoD) yesterday, with the total number of confirmed infections at 80,148 (+385 DoD). The growth factor of new cases increased to 1.59 from .57 on Friday. (Click here for details).
South Korea is on track to overtake Canada as the top buyer of U.S. crude oil in 2020 as a mix of steep price discounts to alternative supplies, attractive refining economics and rebates on shipping charges prove too good to resist for big refiners.
Rosneft has allocated ESPO Blend crude supplies in April to Trafigura, leaving none for China’s CEFC which has a long-term deal to buy oil from the Russian oil giant, four people with knowledge of the matter said.
S&P Global Platts said on Monday the market focus was on WTI Midland crude as a potential addition to dated Brent, a move that would look beyond its North Sea home to ensure enough supply underpins the benchmark.
Naphtha
Asia’s naphtha crack fell on Monday to a four-session low of $59.73 a tonne on muted demand.
A drop in east-bound naphtha cargoes for March to a five-month low of around 1.7 million tonnes will do little to lift spot premiums, which have fallen in the past week to their lowest since September in South Korea, Asia’s biggest naphtha importer.
Cracker maintenance in Taiwan, Japan and Malaysia in March is also expected to deal a sharp blow to naphtha demand. LPG is an alternative feedstock for naphtha and some Asian naphtha crackers will make the switch to LPG when the naphtha spread hits at least $50 a tonne.
The March crack has improved to – $ 2.30 / bbl.
Gasoline
Asia’s gasoline crack hit a three-week low of $6.03 a barrel following a surge in coronavirus cases outside China.
The sharp escalation in cases fed concerns that gasoline demand could take a hit as non-essential travel is curtailed and employees are encouraged to work from home.
The March crack is higher at $8.30 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
No fresh news on the Mid distillate market for now.
The March crack for 500 ppm Gasoil dropped to $9.05 /bbl with the 10 ppm crack at $ 9.95/ bbl. The regrade is at -$ 1.15 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 0.5% VLSFO crack to Brent crude dropped to a fresh low near five-month of $ 11.65 /bblon Monday, extending steady declines since around the start of the year. Demand for VLSFO bunkers has taken a hit in recent weeks on seasonal factors that were compounded by slowing trade due to the coronavirus outbreak.
The weaker crack comes despite sharply lower crude oil prices, which tumbled by more than 3% on Monday.
Danish shipping group A.P. Moller-Maersk plans to raise the proportion of HSFO it consumes from 10% to 25% by the year-end, its CEO said. The world’s largest container shipping firm consumed a total of around 11.80 million MT of shipping fuel in 2019.
The March crack for 180 cst FO is higher at -$7.40 /bbl with the visco spread at $1.40 /bbl .
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh action 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.