Covid-19 in Asia reverses early rally from US pipeline shutdown Monday
London (Quantum Commodity Intelligence) - The early gains in Brent from the shutdown of the Colonial Pipeline after a cyberattack were eroded by the close of European markets as attention switched to the growing risk of rising Covid-19 infections in Asia.
Meanwhile, fuel oil prices and cracks in ARA softened to extend a recent trend after a large build of stocks in Singapore.
July Brent was trading at $68.13/b by 16.30 UK time, down 9 cts from the same time Friday.
May and June Low Sulfur Gasoil futures notched up small gains of $1.75/mt and $1.25/mt to extend the gains of prompt European distillate cracks.
Governments in southeast Asia are stepping up restrictions to curb the spread of Covid-19.
Malaysia has banned all inter-district and interstate travel from today until 6 June, covering this week's Eid al-Fitr holiday.
Singapore, the Philippines, Indonesia and Vietnam have also seen a rise in coronavirus infections, leading to stricter containment measures.
Products
Naphtha cargo prices fell $3.75/mt (41cts/b), softening its crack value on fears Asian demand for the feedstock would falter. The naphtha crack also softened between June and November, although edged gains between December and next April.
Gasoline was the usual mixed bag of moves that reflected the changing sentiment of the day. The Colonial shutdown prompted a wave of speculation about shortages of the road fuel in the US, and Eurobob trade was brisk, with 18,000/mt changing hands over the day. The market started trading at $4/mt above June paper, but ended trading at flat. Premium unleaded gasoline barges captured the end of day sentiment to shed $1.50/mt from Friday.
Jet barges twice traded at 50 cts/mt above the Cif cargo paper in FARAG and were also offered at $22 above May Low Sulfur Gasoil futures. The contango widened in the jet curve, with a cargo offered at a discount of $2.50/mt below the nearby paper curve.
May and June Low Sulfur Gasoil futures notched up small gains of $1.75/mt and $1.25/mt to extend the gains of prompt European distillate cracks. Diesel barges in ARA traded at 75 cts/mt below May paper. Further along the curve, the crack values for swaps from October onwards softened slightly.
Fuel oil prices fell and cracks softened more than any other products. High sulfur fuel oil barges in ARA traded at $366.50/mt, down $3.50/mt (55cts/b). Marine fuel (0.5% sulfur) fell $3/mt. The spread between the two grades widened to $108/mt. Aside from the Singapore stock build, the recent OPEC agreement will result in more sour crudes in the global market. Cracks for high sulfur fuel oil swaps versus Brent fell sharply.
