Crude Oil
Brent crude plunged to its cheapest level in almost 18 years on Monday and U.S. crude briefly tumbled below $20 a barrel as investors faced the growing prospect that the global coronavirus shutdown could last for months.
Brent crude futures fell $2.17 to settle at $22.76 a barrel, the lowest close since November 2002. WTI futures fell $1.42 to to $20.09 a barrel, the lowest close since February 2002.
Declining demand and swiftly filling storage have squeezed prices for major U.S. grades of crude – some to around $11 a barrel.
U.S. President Donald Trump and Russian President Vladimir Putin agreed during a phone call to have their top energy officials meet to discuss slumping global oil markets. Supertanker freight rates are rising for a second time this month as traders rush to secure ships for storage.
Saudi Arabia plans to boost its oil exports to 10.6 MB/D from May’20 because the country is burning less oil for power generation and there is also lower domestic consumption, a Saudi energy ministry official said on Monday.
The Russian state has cut its holding in Rosneft to below a majority stake as part of its deal to buy the group’s Venezuelan assets, which would limit the risk of new US sanctions on Rosneft, at a time when the US and Saudi Arabia are considering joint cuts to oil supply and will not want Moscow ramping up output, analysts say.
India’s HPCL has issued a force majeure notice to Iraq’s Oil Marketing Company (SOMO) to cancel two oil cargoes as local fuel demand is hit by a lockdown to stem spread of coronavirus, an industry source said.
Factory activity in China unexpectedly expanded in Mar’20 after contracting sharply to a record low, with its manufacturing PMI rising to 52 in from the collapse to a record low of 35.7 in Feb’20, China’s NBS said on Tuesday.
Japan’s factory output rose in Feb’20 at a slower pace than the previous month, rising 0.4% MoM, adding to growing signs that the rapidly spreading coronavirus pandemic is taking a toll on an economy already on the cusp of recession.
Covid 19
At a global level, the death toll from the COVID-19 virus rose to 37,815 (+3,830 DoD) yesterday, with the total number of confirmed infections at 785,777 (+63,427 DoD). (Click here for details).
Naphtha
Asia’s naphtha crack more than doubled to reach a two-session high of $21.40 a tonne on Monday, supported by falling prices of raw material Brent crude.
The inter-month spread was at a three-week low of 50 cents, reflecting that tight supplies have mostly eased.
The April crack has improved marginally to -$4.65 / bbl.
Gasoline
Asia’s gasoline crack rose for the third straight day to a one-and-a-half week high although the value remained at a discount to Brent crude. The crack value was at a discount of $3.98 a barrel versus a discount of $4.29 in the previous session.
Gasoline demand has been hard hit by lockdowns and other measures seen around the world to limit people’s movements to prevent the spread of the virus.
The April crack has dropped to -$4.90 /bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel widened to $2.70 per barrel to Singapore quotes on Monday, a fresh low since November 2008. The jet spot differentials were at a discount of $2.46 per barrel on Friday.
Scheduled global airline capacity for the week commencing 30 Mar’20 has fallen by over 20 million seats on the week to under 50 million, less than half of total global capacity in mid-Jan’20, OAG data showed Monday.
Cash differentials for 10 ppm gasoil were at a discount of 61 cents per barrel to Singapore quotes on Monday, the biggest discount since January last year. They were at a discount of 54 cents per barrel on Friday.
Diesel refining margins are bucking the downward spiral engulfing jet fuel and gasoline, lifted by continuing industrial activity and stockpiling even as national lock downs hammer demand for other fuels.
The April crack for 500 ppm Gasoil has dropped to $11.15 /bbl with the 10 ppm crack at $ 11.80 / bbl. The regrade is at -$ 7.60 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Falling crude oil prices helped lift Asia’s front-month 0.5% VLSFO crack against Brent crude to a near two-week high on Monday. The front-month VLSFO crack jumped to $10.84 a barrel on Monday, up from $9.03 a barrel in the previous session and its highest since March 17.
The April crack for 180 cst FO has fallen to -$1.30 /bbl with the visco spread at $0.70 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh trades 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.
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.