Crude Oil
Oil prices fell to their lowest in more than a year on Wednesday after hundreds of new coronavirus cases reported in Europe and the Middle East stoked fears that energy demand would decline. Brent futures fell $ 1.52 to settle at $53.943 a barrel. WTI crude futures settled $ 1.17 lower at $48.73 a barrel.
Prices briefly turned positive after the U.S. government reported a drop in gasoline inventories last week. However, later on , both benchmarks hit their lowest since January 2019, with Brent sinking to $53.03 a barrel and WTI dipping to $48.30 before recovering to their settles.
Oil followed equities lower after reports that 83 people were being monitored in New York for possible coronavirus exposure. First cases of the virus were confirmed in countries including Greece, Georgia and Brazil, while authorities enacted more travel restrictions and quarantines across multiple continents.
The market was also watching for possible deeper output cuts by the OPEC+ group.
Authorities around the world battled to prevent the spread of coronavirus, which has now been found in at least 30 countries. The World Health Organization’s (WHO) chief said while the sudden rise in novel coronavirus cases was “deeply concerning,” the virus could still be contained and did not amount to a pandemic. U.S. President Donald Trump said he will hold a news conference on the coronavirus at 6 p.m.
At a global level, the death toll from the COVID-19 in rose to 2770 (+71 DoD) yesterday, with the total number of confirmed infections at 81294 (+347 DoD). The growth factor of new cases decreased to 0.84 from 1.04 on Tuesday. (Click here for details).
This is the primary reason that the WHO is stressing that we are not seeing a pandemic.
EIA data
The mild build in crude stocks has been reported notwithstanding a huge drop in crude imports of 303 kbpd. Product stocks appear to have drawn on account of an increase in demand of 117 kbpd for gasoline and 391 kbpd for gasoil. This has naturally led to some strong anomalies with our Material Balance statement below.
As per the statement above, Crude stocks appear to have actually drawn while gasoline stocks appear to have built minorly.
Naphtha
Asia’s naphtha crack fell to a five-month low of $53.43 a tonne, dragged down by fears of the fast-spreading coronavirus weighing on the global economy and in turn, hitting petrochemicals demand.
The March crack has dropped to – $ 2.60 / bbl. (Crack Prices not updated)
Gasoline
Asia’s gasoline crack hit a 3-1/2 week low of $5.69 a barrel. Refinery outages continued to take place in the U.S. This time, an explosion and a fire hit Marathon Petroleum Corp’s 330,000 barrels-per-day refinery in Carson, California.
Light distillate stocks in Fujairah rose by 68 KB to 7.41 million barrels. Stocks are around 30% lower than last year’s levels.
The March crack is lower at $7.20 /bbl. (Crack Prices not updated)
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil dipped to 23 cents per barrel to Singapore quotes on Wednesday, compared with a premium of 28 cents per barrel on Tuesday.
Cash premiums for jet fuel were at 17 cents per barrel to Singapore quotes on Wednesday, down from Tuesday’s premiums of 21 cents per barrel.
Jet fuel profit margins, hammered by scores of flight cancellations due to the coronavirus-led travel restrictions, dropped to fresh multi-year lows of $7.16 per barrel over Dubai crude.
Cracks for the aviation fuel were at $7.92 per barrel on Tuesday.
Middle-distillate inventories in Fujairah rose 27.9% to 3.4 million barrels in the week to Feb. 24, data via S&P Global Platts showed. Stocks of middle distillates in Fujairah have averaged 3.5 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 88% higher than the previous year.
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. (Crack Prices not updated)
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s front-month VLSFO crack to Brent crude fell to $10.56 a barrel on Wednesday, its lowest since Sept. 30. The weaker crack comes despite falling crude oil prices.
Residual fuel oil inventories in Fujairah soared 2.213 million barrels (17%) to a three-month high of 15.95 million barrles in the week to Feb. 24. The weekly fuel oil inventories were 55% higher than the year-ago levels. Fuel oil stocks at Fujairah have averaged 12.072 million barrels y disruptions to marine transportation due to the coronavirus outbreak, market participants said Tuesday.
The March crack for 180 cst FO is marginally higher at -$7.45 /bbl with the visco spread at $1.40 /bbl . (Crack Prices not updated)
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.