Crude Oil
Oil prices fell more than 2% on Thursday to the lowest in three months on concerns over the potential economic impact of the coronavirus. Brent crude futures fell $1.52 to settle at $58.29 a barrel. WTI crude futures fell $1.19 to settle at $52.14 a barrel.
During the day, Brent hit a low of $57.71, its lowest since Oct. 8 while WTI hit a low of $51.66 a barrel, its weakest since Oct. 10.
After the markets settled, the WHO declared that the coronavirus outbreak in China now constitutes a public health emergency of international concern. The death toll in China from the virus reached 213 on Friday, with 9,692 cases of infection. The number of infections has already surpassed the total in the 2002-2003 SARS epidemic.
Factory activity in China stalled in Jan’20, with an outbreak of a new virus adding to risks facing the economy despite easing trade tensions, with the factory PMI falling to 50 (-0.2 MoM), while its services sector activity quickened, with the services PMI rising to 54.1 (+0.6 MoM).
The US economy missed the Trump administration’s 3% growth target for a second straight year, posting its slowest annual growth of 2.3% in three years in 2019 as the slump in business investment deepened amid damaging trade tensions.
Naphtha
Asia’s naphtha crack was also up, touching a two-week high of $92.55 a tonne.
Japan’s Asahi Kasei Mitsubishi Chemical Ethylene Corp has restarted a naphtha cracker in Mizushima, western Japan, on Jan. 28, following an outage on Jan. 14. The naphtha cracker has a production capacity of 567 ktpa of ethylene without any turnaround and 496 ktpa with turnaround..
The February crack is stronger – $ 1.45 / bbl.
Gasoline
Asia’s gasoline crack extended gains to reach a three-session high of $4.29 a barrel on Thursday as cutbacks in supply lent support.
Taiwan’s Formosa Petrochemical Corp has reduced throughput at two of its RFCC units which produce mostly gasoline, in view of weak fundamentals. It may also bring forward a scheduled maintenance at one of the two RFCCs by 10 days to March 10, should fundamentals remain weak.
Singapore’s onshore light distillates stocks were at a two-week high of 13.056 million barrels in the week to Wednesday, data from Enterprise Singapore showed.
The February crack is higher at 6.40/ bbl.
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash premiums for 10 ppm gasoil in Singapore dropped a cent to 12 cents per barrel to Singapore quotes on Thursday, the lowest since Nov. 29.
Cash premiums for jet fuel were at 29 cents per barrel over Singapore quotes on Thursday, compared with a premium of 30 cents per barrel in the previous session.
Singapore onshore middle distillate stocks rose 3.6% to a ten-week high of 11.2 million barrels in the week to Jan. 29, Enterprise Singapore data showed. Overall, onshore middle distillate inventories were 5.1% lower year on year.
The February crack for 500 ppm Gasoil has fallen to $10.70 /bbl with the 10 ppm crack at $ 11.35 / bbl. The regrade is at -$ 1.00 /bbl
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Singapore’s onshore fuel oil stocks rose by 737 kb to 23.56 million barrels from the previous week, data from Enterprise Singapore showed. That was their highest since the week to June 19. Compared with the same period last year, however, residual fuel stocks were 16% higher.
The February 180 cst crack has improved to -$ 9.85 / bbl with the visco spread at $ 1.20 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
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.
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.