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Corona virus hits distillate cracks; throughput cuts likely
Key recent developments / data points in the oil & gas sector:
* In Q4FY20-TD, Singapore GRM at US$0.38/bbl is down 88% YoY and 77% QoQ.
* Net auto fuel marketing margin is Rs1.82/l in Q4FY20-TD and Rs3.1/l on 3-Feb.
* OPEC Jan’20 output 0.29m b/d below quota at 28.37m b/d on Libya output fall.
* Diesel and jet fuel cracks at 180-233 week lows last week as Corona virus hits Chinese demand: Diesel and jet fuel cracks plunged to 180-233 week lows of US$9.2-10.1/bbl last week as Chinese lunar new-year passengers by train, road, ships and air plunged by 73% YoY (air and train down 57-67% YoY) due to Corona virus outbreak. Residents of provinces with population of 882m have been told not to return to work and avoid congregation at least until 9-Feb’20. Lockdown in Hubei province is extended at least up to 14-Feb’20. S&P Global Platts on 29-Jan’20 estimated hit due to Corona virus outbreak to global oil demand of 1) 0.22-0.56m b/d in CY20 and 2) 0.9-0.65m b/d in the best case and 2.6-2.0m b/d in the worst case in Feb-Mar’20. Jet fuel demand decline in Feb’20 is estimated at 0.62- 1.0m b/d in the best and worst case scenarios. Diesel cracks have also been hit by demand from ships disappointing, rising supply from new refining capacity added in CY19, surge in diesel exports from China and mild winter.
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