Asia's gasoline crack extended losses on Thursday, widening its rare discount to crude to its steepest since November 2011 amid higher crude oil prices and concerns over collapsing demand for refined fuels as the coronavirus pandemic continues to weigh on sentiment. Asia's gasoline crack widened its discount to Brent to minus $3.38 a barrel, down from minus $1.04 a barrel in the previous session.
Oil prices rose nearly 10% on Thursday after a three-day selloff drove them to their lowest levels in almost two decades as demand plummeted due to the coronavirus and supplies surged in a fight for market share between top producers Russia and Saudi Arabia. By contrast, the naphtha crack edged away from a more than six-month low in the previous session, climbing 5 cents to $30.90 a tonne on Thursday.
Singapore onshore light distillates stocks, which comprise mostly gasoline and blending components for petrol, fell by 3%, or 428,000 barrels, to a three-week low of 14.164 million barrels in the week to March 18 amid higher gasoline exports, data from Enterprise Singapore showed. In the previous week, the light distillate inventories hit an 11-month high of 14.592 million barrels.
Singapore's net exports of gasoline totalled 249,000 tonnes in the week to Wednesday, up from 42,000 tonnes in the week before, the data showed. China exports of gasoline to Singapore fell to 77,000 tonnes during the week, down from 212,000 tonne in the week before. In the US, gasoline stocks fell sharply by 6.2 million barrels in the week to 240.82 million barrels as refineries kept capacity use steady, the US Energy Information Administration said.
Gasoline demand is plummeting, according to independent analysts, but the weekly data from the EIA did not reflect the dramatic reset seen in oil markets. Gasoline prices have fallen further than diesel prices, in the expectation that fewer drivers will be on the roads even if truck deliveries continue.
A weak global economy, unprepared for COVID-19, is why we are seeing escalated panic in the broader global markets, analysts said. "This is the most dismal oil demand picture we have witnessed in a long time with a simultaneous collapse in jet fuel, gasoline, shipping fuel, petrochemicals, and oil used for power generation," said Louise Dickson, analyst at Rystad Energy in a note late on Wednesday. "Unlike structural economic collapses, we don't know when the corona effect will ease up - markets could be wrestling with virus well into 2021 in a worst case scenario," said Dickson.