Crude prices fell about 3% on Tuesday, dropping for a third day after the U.S. government warned Americans to prepare for the disease. Brent futures fell $ 1.35 to settle at $54.95 a barrel. WTI crude futures settled $ 1.53 lower at $49.90 a barrel.
At a global level, the death toll from the COVID-19 in rose to 2699 (+65 DoD) yesterday, with the total number of confirmed infections at 80997 80,148 (+849 DoD). The growth factor of new cases decreased to 1.04 from 1.59 on Monday. (Click here for details).
We continue to be optimistic about the status coming under control soon.
However, the impact of the outbreak will be felt for a while. The IEA expects global oil demand to contract by 435 KB/D in Q1’20, and lowered its forecast for 2020 by 365 KB/D to 825 KB/D, its outlook falling to its lowest level in a decade. The IEA Executive Director also cautioned it could be reduced further due to the impact of the coronavirus outbreak.
As per API data, while crude has build less than expected, products have drawn less than expected as well. On the balance, the data appears mildly bearish.
Asia’s naphtha crack recovered 2.2% to a two-session high of $61.05 a tonne on Tuesday as buying interest resumed after a brief absence.
South Korean buyers were out last week and had snapped up more than 110,000 tonnes of the petrochemical feedstock for first-half April delivery. But premiums have been falling due to weaker fundamentals as coming cracker maintenance in Japan, Malaysia and an ongoing turnaround in Taiwan will choke off demand.
Egypt has offered 9 cargoes totalling 346,500 tonnes of naphtha for April to June loading from Suez, or three cargoes a month through a tender closing next month.
The March crack has dropped to – $ 2.60 / bbl.
Asia’s gasoline crack rebounded from a three-week low to a four-session high of $6.94 a barrel.
The March crack is lower at $7.20 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10 ppm gasoil dipped to 28 cents per barrel to Singapore quotes on Tuesday, compared with a premium of 38 cents on Monday.
Cash premiums for jet fuel climbed 16 cents to 21 cents per barrel to Singapore quotes on Tuesday, helped by a couple of firmer deals in the physical market.
China has ramped up fuel exports to compensate for losses to domestic demand as it grapples with the coronavirus outbreak. China’s Q1’20 product surplus is seen around 27 million MT according to CNPC.
The March crack for 500 ppm Gasoil dropped to $9.00 /bbl with the 10 ppm crack at $ 9.90/ bbl. The regrade is at -$ 1.15 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Break-bulk ex-wharf premiums for 380-cst high-sulphur fuel oil has been crashing.
Demand for dry bulkers, tanker and container ships has come under pressure recently amid slowing trade flows with China. Asian refiners are expected to scale back production of low-sulfur marine fuels in the short term as a recent rally in IMO-compliant shipping fuel prices is cooled by disruptions to marine transportation due to the coronavirus outbreak, market participants said Tuesday.
Banks are suspending the credit lines for some Chinese independent oil refineries amid rising concerns about overall industrial defaults.
The March crack for 180 cst FO is marginally higher at -$7.45 /bbl with the visco spread at $1.40 /bbl .
Click Here for a graphical depiction of Fuel Oil stocks by region.
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.
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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.