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 $ 1.25 to settle at $52.18 a barrel. WTI crude futures settled $ 1.64 lower at $47.09 a barrel.
Oil prices tumbled for a fifth day on Thursday to their lowest level in more than a year, as new reports of novel coronavirus cases outside China spurred investor fears. Roughly 1 million U.S. crude futures contracts changed hands on Thursday, the busiest day of trading since early January.
The benchmark has dropped nearly 14% in the last five days of trading. Trading in oil markets suggested investors expect a prolonged period of oversupply, with demand hurt as the virus has spread to large economies including South Korea, Japan and Italy.
U.S. gasoline futures tumbled as much as 5.5% to $1.3742 a gallon, the lowest since late January 2019. Heating oil futures dropped about 0.7% to settle at $1.4892 a gallon, after hitting the lowest since July 2017. Margins for producing distillates – heating oil, diesel fuel and jet fuel – have hit their lowest levels since 2017 due to fears of reduced demand.
For both Brent and WTI, the spread between December 2020 futures and December 2021, a popular trade used as a barometer for supply expectations, fell firmly into negative territory. Both spreads hit the widest levels since January 2019, signaling that erosion in demand could lead to a glut through the end of this year.
The crude market is watching for a salve in the form of additional output cuts by the OPEC+ group
The S&P 500 suffered its biggest one-day point loss since August 2011 and the Dow Jones Industrial Average marked its biggest-ever one-day point drop, as investors fled to the safety of assets like Treasury bonds and gold.
The WHO warned on Thursday that no country should make the mistake of assuming it will be spared from the virus. Governments from Iran to Australia raced to contain the epidemic’s spread.
At a global level, the death toll from the COVID-19 in rose to 2858 (+88 DoD) yesterday, with the total number of confirmed infections at 81294 (+1911 DoD). The growth factor of new cases increased to 1.35 from 0.84 on Wednesday. (Click here for details).
For the first time since the outbreak erupted, the number of new coronavirus infections reported outside China exceeded new Chinese cases.
Naphtha
Asia’s naphtha crack stayed at a five-month low for the second day on Thursday at $49.65 a tonne weighed down by concerns of slower economic growth.
Spot naphtha deals this week, however, were brisk with many buyers seen although several petrochemical producers in Asia have reduced throughput since December/January.
The March crack is higher at – $2.70 / bbl.
Gasoline
Asia’s gasoline crack hit a one-month low of $4.02 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.
Singapore’s onshore light distillates stocks fell by 655 kb (nearly 4.9% ) in the week to Wednesday to a 7-week low of 12.8 million barrels.
The March crack is lower at $5.90 /bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil were at 20 cents per barrel to Singapore quotes, compared with a premium of 23 cents per barrel on Wednesday.
The front-month time spread for 10 ppm gasoil moved into contango on Thursday to trade at a discount of 6 cents a barrel. They traded at a premium of 9 cents per barrel on Wednesday.
Cash differentials for jet fuel flipped back into a discount of 7 cents per barrel to Singapore quotes on Thursday, compared with a premium of 17 cents per barrel on Wednesday.
Airlines are flying blind into a crisis of unknown severity and duration, while the outlook is worsening as new outbreaks spread fear beyond the already suspended Asian destinations – threatening more routes and broader air travel demand.
Singapore’s onshore middle distillates stocks fell by 280 kb to 11.4 million barrels in the week to Wednesday.
The March crack for 500 ppm Gasoil bounced back to $8.30 /bbl with the 10 ppm crack at $ 9.20/ bbl. The regrade is at -$ 1.15 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month barge crack discount for 380-cst HSFO was at its narrowest in nearly five months on Thursday amid tightening supplies, firm refining feedstock demand and plummeting crude oil prices.
The 380-cst HSFO barge-crack for March was at minus $13.11 a barrel, up from minus $13.49 a barrel in the previous session and its highest since Oct. 26.
Singapore’s residual fuel oil inventories rose 3% in the week ended Feb. 26 and hit their highest in more than nine months.
Onshore fuel oil stocks rose by 740 kb from the previous week to 24.97 million barrels, data from Enterprise Singapore showed.
This came as net import volumes jumped to a six-week high of 1.293 million tonnes, up 255% from the previous week and well above the 2020 weekly average of 929 KT.
The March crack for 180 cst FO is higher at -$6.30 /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.
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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.