U.S. crude prices settled higher on Wednesday, bolstered by progress on a massive pending U.S. economic stimulus package. Brent crude futures rose 24 cents to settle at $27.39 a barrel. WTI futures rose 48 cents to $24.49 a barrel.
China is buying a record 1.6 million MT of Russian oil for loading at sea over the next four weeks, taking advantage of rock bottom prices for Russia’s flagship Urals grade combined with a collapse in demand in Europe, traders said on Wednesday.
Singapore’s economy suffered its biggest contraction in a decade in the first quarter, with its Q1’20 GDP falling -2.2% YoY, -10.6% QoQ, as the coronavirus pandemic prompted the city-state to cut its full-year GDP forecast and plan for a deep recession.
Global oil demand could fall by as much as 4.9 MB/D, or by about 4.9%, in 2020 due to the coronavirus outbreak, Rystad Energy said on Wednesday. The consultancy had forecast last week it would fall by 2.8 MB/D in 2020.
Venezuela has opened talks with China over possible financial support to cope with a sharp drop in oil prices and the arrival of the novel coronavirus, four sources familiar with the negotiations said.
Some ports in India have declared force majeure after Asia’s third-biggest economy announced a 21-day lockdown to prevent the spread of the coronavirus. The force majeure declaration could delay discharge of crude oil tankers, an Indian refining source told Reuters. Indian LNG importers have declared Force Majeure as well.
Crude inventories rose by 1.6 million barrels in the most recent week, the EIA said. Inventories, which have risen for nine straight weeks, are expected to keep growing as fuel demand declines and refineries pare back activity.
U.S. weekly gasoline product supplied – a proxy for demand – dropped 859 kbpd to 8.8 million bpd last week, the biggest one-week decline since September 2019, according to the EIA. Overall fuel demand fell by nearly 2.1 million bpd for the week.
Our material balance statement suggests a build for distillates instead of the draw reported. As of this stage, it is not particularly relevant to market action which is driven by Covid 19 for now.
At a global level, the death toll from the COVID-19 virus rose to 21,283 (+2,376 DoD) yesterday, with the total number of confirmed infections at 471,035 422,829 (+48,206 DoD). (Click here for details).
Asia’s naphtha crack recovered sharply to end in the positive territory on Wednesday, a day after it had flipped to a discount for the first time since June 2019. The crack premium was at $10.10 a tonne on Wednesday, a dramatic turn from a discount of $8.63 a tonne in the previous session.
The April crack has recovered sharply to -$4.65 / bbl.
Asia’s gasoline hit a discount of $6.62 a barrel, lowest since late 2008 during the financial crisis. Gasoline demand has been severely crushed by lockdowns in parts of the world as countries sought to contain the virus and limited people movements.
The April crack has recovered to -$6.55 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Asia’s cash differentials for jet fuel plunged further on Wednesday to their biggest spot discounts in more than 11 years, hammered by stifled aviation demand due to the coronavirus pandemic. Cash discounts for jet fuel were at $2.28 per barrel to Singapore quotes on Wednesday, the widest since November 2008. They were at a discount of $1.71 per barrel in the previous session.
Refining profit margins for jet fuel rose for a second consecutive session to $2.51 a barrel over Dubai crude during Asian trading hours on Wednesday, up from 62 cents per barrel a day earlier. The Asian margins briskly turned negative for the first time in over a decade earlier this week, while jet fuel prices in New York fell to the lowest on record.
Cash differentials for 10 ppm gasoil widened their discounts to 31 cents per barrel to Singapore quotes on Wednesday, compared with a 23-cent discount in the previous session.
Middle-distillate inventories in Fujairah dropped 39.5% to 1.9 million barrels in the week to March 23, data via S&P Global Platts showed. Stocks of middle distillates in the Fujairah oil hub have averaged 3.1 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019. The weekly Fujairah middle distillate stocks were about 14% lower than a year earlier.
The April crack for 500 ppm Gasoil has improved to $10.65 /bbl with the 10 ppm crack at $ 11.25 / bbl. The regrade is at -$ 6.50 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
The cash differential for 0.5% VLSFO in Asia rose to its highest level in six sessions on Wednesday, despite the lack of trade activity for cargoes of the fuel in the Singapore trading window. The VLSFO cash discount was at minus $4.74 a tonne to Singapore quotes, up from minus $5.58 a tonne in the previous session. VLSFO cargoes last traded in the window on March 13.
Residual fuel oil inventories in Fujairah rose to a three-week high after gaining 1% from the previous week. Fujairah inventories for heavy distillates and residues rose 148 kb to 13.3 million barrels in the week to March 23, S&P Global Platts data showed. However, compared with year-ago levels, the weekly fuel oil inventories at FOIZ were 28% higher. Fuel oil stocks at Fujairah have averaged 12.4 million barrels, or 1.95 million tonnes, so far in 2020, up 15% from 2019 average volumes.
The April crack for 180 cst FO is higher at -$3.00 /bbl with the visco spread at $0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Our regrade trade of yesterday turned around in one day flat. 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 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.