Crude Oil
Market prices were mixed on Tuesday.
Brent futures settled 47 cents higher to settle at $20.46 /bbl. WTI fell 44 cents to settle at $12.34 /bbl.
Globally, storage onshore was estimated to be about 85% full as of last week. Texas energy regulators will next week vote on a controversial proposal to reduce the state’s oil output after delaying it due to concerns about legal challenges.
As U.S. crude output continues to fall, shale producers are butting heads with their service companies over the termination of purchase agreements. Russian Energy Minister Alexander Novak said oil markets would start balancing out once an output deal took effect, but no significant rise in prices was likely in the near future due to high levels of global storage.
China’s Ministry of Commerce has allocated the second round of oil product export quotas, at 24.63 million MT, under the general trade route to Sinopec, PetroChina, Sinochem, CNOOC and China National Aviation Fuel.
US consumer confidence tumbled to near a six-year low in Apr’20 at 86.9 from 118.8 in Mar’20, as tough measures to curb the spread of the novel coronavirus sharply disrupted economic activity and threw millions of Americans out of work.
South Korea’s Mar’20 factory output jumped by the most in 11 years, up 4.6% MoM, as demand for display panels and cars received an unexpected boost from lengthy shutdowns in competing Chinese factories amid the coronavirus pandemic.
Hedge Recommendations
U.S. crude inventories rose to 510 million barrels, just short of an all time high of 535 million barrels in 2017. Gasoline stocks, however, showed a marginal draw. The Energy Information Administration will release inventory data Wednesday morning.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 217,813 (+6,365 DoD) yesterday, with the total number of confirmed infections at 3,136,508 (+76,562 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack hit a five-session low of $42.55 a tonne premium against Brent crude, with the value remaining well above this month’s average at a discount of close to $11.55 a tonne. Recent strong demand has help soaked up excess supplies, leading to an increase in higher bids for cargoes.
However, there are concerns the record high freight rates could dent buying interest for European cargoes. Asia is structurally short of the light fuels. Overall, the total naphtha flows into Asia for April, at 5.1-5.2 million tonnes, have fallen significantly from March’s total volume of 5.7-5.8 million tonnes.
The May crack has dropped to -$2.40 / bbl.
Gasoline
Asia’s 92-octane grade gasoline was at a discount of $1.71 a barrel to Brent crude, as excess supplies weighed.
The May crack has improved to -$2.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash differentials for 10 ppm gasoil were at a discount of $1.99 per barrel to Singapore quotes on Tuesday, compared with a discount of $2.13 a barrel in the previous session.
The front-month time spread for 10 ppm gasoil widened its contango structure on Tuesday to trade at a discount of $1.84 per barrel.
Cash discounts for jet fuel narrowed to $4.38 a barrel to Singapore quotes on Tuesday, compared with $4.50 a barrel on Friday.
The May crack for 500 ppm Gasoil has dropped to $2.50 /bbl with the 10 ppm crack at $ 4.70 / bbl. The regrade is at -$ 5.80 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The front-month 0.5% VLSFO East-West EW arbitrage spread rose to a near six-week high on Tuesday. The spread for May climbed to $43.75 a tonne, up from $40.50 a tonne in the previous session and its highest since March 18.
The May crack for 180 cst FO has eased to -$3.40 /bbl with the visco spread at $0.90 /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 refinery.
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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.