Crude Oil
Oil prices plunged 5% on Friday as demand destruction caused by the coronavirus outweighed stimulus efforts by policymakers around the world.
Brent crude futures fell $1.41 to settle at $24.93 a barrel. WTI futures fell $1.09 to $21.51 a barrel.
Both contracts posted a fifth straight weekly loss with Brent falling 8% and WTI more than 3%. Both contracts are down nearly two thirds this year.
The Group of 20 major economies on Thursday pledged to inject more than $5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic”. Leaders of the U.S. House of Representatives are determined to pass a $2.2 trillion coronavirus relief bill by Saturday at the latest, hoping to provide quick help as deaths mount and the economy reels.
Rosneft said on Saturday that it is ceasing operations in Venezuela and selling all assets related to activities there. Three VLCCs chartered by Rosneft to transport Venezuelan oil left Caribbean waters empty on Saturday after the cargoes were canceled due to sanctions.
Saudi Arabia said on Friday it was not in talks with Russia to balance oil markets despite rising pressure from Washington to stop a price rout amid the coronavirus pandemic and an attempt by Moscow to fix a rift with the de facto OPEC leader.
India’s top refiners IOC and MRPL have declared force majeure as local fuel demand is hit due to a nationwide lockdown to stem the spread of coronavirus. The two refiners are seeking to either delay or cancel purchases of crude in Apr’20 from Middle East suppliers, sources said.
India’s electricity use plummeted to levels last recorded in Mar’15, due to a nationwide lockdown to arrest the spread of the coronavirus. Electricity use lower by nearly 25% compared with the average consumption during the first three weeks of Mar’20 before the lockdown.
US energy firms cut the most oil rigs in a week since April 2015, cutting 40 rigs to total 624 (-192 YoY) removing rigs for a 2nd week in a row as a coronavirus-related slump in economic activity and fuel demand has forced massive retrenchment in investment by oil and gas companies.
Money managers raised their net long US crude futures and options positions by 18,290 to 163,884 in the week to 24 Mar’20, the US CFTC said on Frida.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 33,980 (+9,893 over the weekend) yesterday, with the total number of confirmed infections at 722,350 (+190,126 over the weekend). (Click here for details).
Mainland China reported its first locally transmitted coronavirus case in three days and 54 new imported cases as Beijing ordered airlines to implement sharp reductions in international flights.
The Chinese President told the US President on Friday that he would have China’s support in fighting the coronavirus, as Wuhan, the Chinese city where the outbreak emerged, reopened to incoming traffic.
Naphtha
Asia’s naphtha crack dived 62% to end the week at a three-session low of $9.08 a tonne on worries that a bleak economic outlook could prompt crackers to keep their throughput at reduced rates.
Several crackers in Asia had already trimmed cracker output in either December or the start of this year to combat eroded margins, with some maintaining the lower throughput this month.
The April crack has fallen to -$4.70 / bbl.
Gasoline
Asia’s gasoline crack remained in the red for the ninth straight session as demand took a hit due to the pandemic that has infected more than 500,000 people and forced countries into lockdowns. The crack stood at a discount of $4.29 a barrel and has lost more than 190% of its value since the start of the year.
Gasoline stocks in ARA edged up by 3.6% to a three-week high of 1.143 million tonnes in the week to Thursday.
The April crack has jumped back to -$4.70 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Refining margins for jet fuel crawled up to $2.86 a barrel over Dubai crude during Asian trading hours, from $2.29 per barrel a day earlier. The April/May time spread for jet fuel in Singapore widened on Friday to trade at a discount of $2.68 a barrel, compared with minus $2.51 in the previous session.
Cash discounts for jet fuel widened by a cent to $2.46 per barrel to Singapore quotes on Friday, the widest since November 2008.
Cash discounts for 10 ppm gasoil also widened to 54 cents per barrel to Singapore quotes on Friday, compared with a 40-cent discount in the previous session.
Gasoil stocks held in ARA rose 3.8% to 1.9 million tonnes in the week to March 26. ARA jet fuel inventories slipped 2.2% at 451,000 tonnes. Compared with a year earlier, jet fuel stocks were down 37.5%, while gasoil inventories were 30.1% lower.
The April crack for 500 ppm Gasoil has jumped to $12.00 /bbl with the 10 ppm crack at $ 12.65 / bbl. The regrade is at -$ 7.00 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
The cash differential for 0.5% VLSFO in Asia slipped to a three-session low on Friday amid a lack of trade activity for cargoes of the fuel in the Singapore trading window. The VLSFO cash discount was at minus $5.51 a tonne to Singapore quotes, from minus $5.01 a tonne in the previous session.
Residual fuel inventories in ARA edged up to a six-month high of 1.291 million tonnes in the week to March 26, marginally higher from the 1.287 million tonnes in the previous week. Compared with last year, the ARA fuel oil inventories were 54% higher and above the five-year seasonal average of 1.163 million tonnes.
The April crack for 180 cst FO has risend to -$0.70 /bbl with the visco spread at $0.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
We will add FO cracks for April and May 2020 at current levels of -$0.70 and -$3.20 repectively
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.