Crude futures sank to three-month lows on Monday as the death toll from China’s coronavirus grew. Brent crude futures fell $1.32 to settle at $59.32 a barrel. WTI crude futures fell $1.05 to settle at $53.14 a barrel.
The prospect of the virus curtailing travel and generally slowing oil demand spooked the market considerably. Brent crude settled settled at its lowest since Oct. 21. U.S. crude last settled lower on Oct. 2.
Global stock exchanges, which oil prices tend to follow, also sank as investors grew increasingly anxious about the widening crisis. Demand spiked for safe-haven assets, such as the Japanese yen and Treasury notes.
The death toll from the coronavirus rose to 81 and the Chinese government extended the Lunar New Year holiday to Feb. 2, trying to keep as many people as possible at home to prevent the virus from spreading further. The cost of insuring exposure to China’s sovereign debt rose to its highest level since mid-Oct’19, with its 5-year CDS jumping by 4 bps from Friday’s close to 41 bps, compared to 30 bps a week ago, amid rising fears about the possible economic impact of the coronavirus outbreak.
Saudi Arabia and the United Arab Emirates, allies in the Organization of the Petroleum Exporting Countries (OPEC), tried to play down the impact of the virus on Monday, with Riyadh, the de-facto OPEC leader, saying the group could respond to any changes in demand.
Asia’s naphtha crack edged down six cents to touch a 2-1/2 week low of $78.78 a tonne on Friday, the last business day in Singapore.
Spot trades were mostly muted as the Lunar New Year drew some participants away.
Buying had been brisk between Monday and Thursday, where South Korea and Taiwan snapped up at least 300 KT of naphtha for March delivery. India’s BPCL has offered 35 KT of naphtha for Feb. 9-10 loading from Mumbai through a tender due to be awarded on Jan. 28.
The February crack is lower at – $ 4.05 / bbl.
Asia’s gasoline crack was at a one-week high of $4.67 a barrel.
India’s MRPL has offered 35,000 tonnes of gasoline for Feb. 20-22 loading from New Mangalore through a tender which closes on Jan. 30.
The February crack is lower at 4.80/ bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Cash premiums for 10 ppm gasoil in Singapore were at 21 cents a barrel to Singapore quotes, down from 22 cents per barrel a day earlier.
Cash premiums for jet fuel dipped to 40 cents per barrel over Singapore quotes on Friday, compared with 45 cents per barrel on Thursday.
The death toll from the virus has climbed to 106, with 4,193 confirmed cases in China. Overseas, the infection has been detected in 44 patients across 13 countries. The World Health Organisation has declared it an emergency but stopped short of declaring the epidemic of international concern.
The February crack for 500 ppm Gasoil has tumbled to $ 9.65 /bbl with the 10 ppm crack at $ 10.40 / bbl. The regrade is at -$ 0.25 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
The front-month barge-crack discount for 380-cst high sulphur fuel oil (HSFO) extended gains on Friday, the last business day in Singapore, its narrowest discount in four months, amid tightening supplies, firm refining feedstock demand and weakening crude oil prices. The front-month crack discount was last narrower on Sept. 26.
U.S. refiners were reported last week to be scooping up cheap high-sulphur fuel oil for processing from Russia and the Baltic states as they take advantage of new shipping rules that have cut demand for the dirtier marine fuel.
The February 180 cst crack has dropped to -$ 11.15 / bbl with the visco spread at $ 1.05 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
No fresh action for today. Jet consumers may however examine the possibility of putting in place hedges either off crude or off the flat price in jet.
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.