Asia Distillates-Cracks, differentials firm week on week as spot activity rises

Asia’s middle distillates markets rose slightly week on week, on both the margins and cash differentials front, as spot market activity for end-December and January parcels started to pick up, though the outlook was mixed.

More term contracts were being settled for both gasoil and jet fuel. Premiums for diesel/gasoil were slightly lower year-on-year, reflecting the cautious market outlook among traders.

Jet fuel premiums, however, were stable to slightly higher, with strong demand expectations in the market mostly prevalent.

On the spot front for gasoil, the market still focussed on discounts amid worries of shaky fundamentals in the first quarter next year, though the swap price structure remained backwardated following ICE gasoil futures.

China’s exports starting January, amid a lack of fresh quotas, were also adding to supply uncertainties. So far, domestic offtaking from some industrial sectors has been healthy, with local inventories falling for three straight weeks, a trade source said.

Refining margins GO10SGCKMc1 for transport and industrial fuel were little changed from last week at $22.34 a barrel amid limited fluctuations throughout the past five trading sessions.

Spot market discounts GO10-SIN-DIF for December and early January cargoes narrowed to around 22 cents a barrel week on week despite a buy-sell gap as the swap market’s price structure was volatile.

Jet fuel refining margins JETSGCKMc1 climbed almost 2% week-on-week, fuelled by stronger demandin some regions especially on the heating oil front.

Regrade JETREG10SGMc1, however, went back to a discount of 30 cents a barrel on the last trading session of the week as sellers re-emerged to cash in on the positive spreads the past two weeks.

SINGAPORE CASH DEALS O/AS

– No deals for both fuels.

INVENTORIES

– Gasoil inventories were bolstered by high imports from the Middle East and East Asia, Dutch consultancy Insights Global’s Lars van Wageningen said, quoting the company’s inventory data, outweighing the strong flow of product up the Rhine to inland markets. ARA/

REFINERY NEWS REF/OUT

– Marathon Petroleum MPC.N returned a crude distillation unit (CDU) to normal operation on Wednesday at its 593,000 barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas, people familiar with plant operations said on Thursday.

NEWS

– Mexican state-owned oil company Petróleos Mexicanos PEMX.UL is working to nail down the start-up date at its newest refinery, months after the government said it had begun early output to ramp up to full capacity by December.

– Saudi Arabia and Russia, the world’s two biggest oil exporters, on Thursday called for all OPEC+ members to join an agreement on output cuts for the good of the global economy only days after a fractious meeting of the producers’ club.

– Brazilian state-run oil company Petrobras PETR4.SA said it will reduce refinery gate diesel prices by an average 6.7% starting Friday, while keeping gasoline prices steady “at the moment.”

– India’s purchases of Russian oil could rise due to easing global oil prices, a senior government official said on Friday.
Source: Reuters (Reporting by Trixie Yap; Editing by Sohini Goswami)