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Asia Distillates-Gasoil cash discounts widen on abundant supplies

Asia’s cash differentials for 10 ppm gasoil weakened on Thursday, weighed down by ample supplies available in the region amid a sluggish demand recovery.

Cash discounts for 10 ppm gasoil GO10-SIN-DIF widened to 31 cents per barrel to Singapore quotes, compared with a 29 cent discount a day earlier.

Higher exports from China and India in recent weeks, alongside limited scopes of arbitrage opportunities to Europe, is keeping the regional gasoil market grappling with supplies, traders said.

The exchange of futures for swaps (EFS), which determines the gasoil price spread between Singapore and Northwest Europe, traded around minus $11 a tonne on Thursday – a level that typically makes it unworkable for arbitrage shipments.

Gasoil arbitrage to the west is usually profitable when the EFS trades at about minus $15 a tonne or below, although it also depends on factors such as freight rates, according to trade sources.

Traders and refiners, however, have been using some new-build supertankers to take diesel from Asia to the West on their maiden voyages, partly buoyed by expectations that demand for the industrial fuel would pick up pace following COVID-19 vaccinations.

Refining margins, or cracks, for 10 ppm gasoil were at $5.27 per barrel over Dubai crude during Asian trading hours, up from $4.76 per barrel on Wednesday.

– China’s State Council, the country’s cabinet, has approved a long proposed merger of Sinochem Group and China National Chemical Corp, or ChemChina, the Chinese state assets regulator said on Wednesday.

– The complex merger, which has been under discussion since at least 2017, would create the world’s biggest industrial chemicals firm.

– No gasoil deals, no jet fuel trades

– The oil market is likely to be in balance in the second half of 2021, even though European coronavirus lockdowns and U.S. winter storms caused disruptions in March, crude and petroleum products market price structures showed.

– Crude oil prices rose on Thursday, recouping some of the previous session’s losses on expectations that a meeting of OPEC and its allies later on Thursday would yield output constraint in the face of resurgent COVID-19 infections in some regions.

CASH ($/T) ASIA CLOSE Change % Change Prev Close RIC
Spot Gas Oil 0.5% 64.15 -1.98 -2.99 66.13 GO-SIN
GO 0.5 Diff -1.62 -0.02 1.25 -1.6 GO-SIN-DIF
Spot Gas Oil 0.25% 64.32 -1.98 -2.99 66.3 GO25-SIN
GO 0.25 Diff -1.45 -0.02 1.40 -1.43 GO25-SIN-DIF
Spot Gas Oil 0.05% 64.65 -1.98 -2.97 66.63 GO005-SIN
GO 0.05 Diff -1.12 -0.02 1.82 -1.1 GO005-SIN-DIF
Spot Gas Oil 0.001% 65.46 -1.98 -2.94 67.44 GO10-SIN
GO 0.001 Diff -0.31 -0.02 6.90 -0.29 GO10-SIN-DIF
Spot Jet/Kero 62.53 -2.13 -3.29 64.66 JET-SIN
Jet/Kero Diff -0.65 -0.05 8.33 -0.6 JET-SIN-DIF
Brent M1
Gasoil M1
Gasoil M1/M2
Gasoil M2
Regrade M1
Regrade M2
Jet M1
Jet M1/M2
Jet M2
Gasoil 500ppm-Dubai
Cracks M1
Gasoil 500ppm-Dubai
Cracks M2
Jet Cracks M1
Jet Cracks M2
East-West M1
East-West M2
Crack LGO-Brent M1
Crack LGO-Brent M2
Source: Reuters (Reporting by Koustav Samanta; Editing by Sherry Jacob-Phillips)

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