Asia Distillates: Brisk activity continues, more Feb refiner offers emerge

Asia’s middle distillates markets continued to be brimming with spot activity on the trading window, while more offers for February spot – especially jet fuel – emerged as well against a backdrop of firmer energy prices.

Two key South Korean refiners were heard to have offered spot. At least two more traders were seeking to send Asian jet fuel cargoes to the U.S. west coast, in line with earlier expectations.

Some talks of Japan buying term cargoes were evident in the market but further details could not be confirmed.

Meanwhile, traders were mixed on gasoil fundamentals – though the east-west arbitrage remained closed – as talks of fewer spot sales from northeast Asia emerged ahead of an earlier refinery maintenance season.

However, China-origin diesel exports will likely remain limited in the first quarter of this year, given the better profitability for jet fuel and also expectations of better demand in the domestic market in the near-term, two refinery sources said.

The 10-ppm sulphur gasoil refining margins (GO10SGCKMc1) closed the trading session lower 50 cents week on week, at below $16 a barrel – despite gains in the ICE gasoil markets

Cash differentials (GO10-SIN-DIF) were little changed despite buying interst swooping in from western trading house Glencore, against a backdrop of limited lower-priced offers in the open market.

Regrade (JETREG10SGMc1) closed at a discount of around $1.30 a barrel, little changed week on week.

SINGAPORE CASH DEALS

– One gasoil deal, one jet fuel deal

INVENTORIES

– Gasoil stocks, which include diesel, dropped to 2.47 million metric tons, as demand from inland destinations on the Rhine remained very weak, Wageningen said.

NEWS

– Pipeline operator Kinder Morgan Inc KMI.N said that two of its fuel pipelines in Los Angeles have been shut since Jan. 8 due to power outages, as the most destructive wildfires in the city’s history continued to burn uncontained on Thursday.

– Oil prices surged on Friday and were on track for a third straight week of gains as traders focused on potential supply disruptions from more sanctions on Russia and Iran.
Source: Reuters