Asia Distillates-Gasoil cracks edge higher, cash discounts narrow
Asian refining margins for 10ppm gasoil rose on Friday despite firmer crude prices, while cash discounts for the industrial fuel narrowed to their smallest levels in 3-1/2 months.
Refining margins or cracks for gasoil with 10ppm sulphur content climbed to$16.32 a barrel over Dubai crude on Friday, posting their fifth consecutive week of gains. The margins were at $16.17 a barrel on Thursday and have surged about 13 percent in the last one month.
Cash discounts for 10ppm gasoil GO10-SIN-DIF were at 12 cents a barrel to Singapore quotes, the lowest discounts since Nov. 20. The benchmark gasoil discounts were at 13 cents per barrel on Thursday.
The March/April time spread, which returned to backwardation last week, were at a premium of 15 cents a barrel on Friday, compared with 19 cents a day earlier.
Backwardation, when a prompt contract is more expensive than subsequent months, makes it uneconomical to store the product. It is usually seen as an indication that the market isbrebalancing and prices would likely head higher in future months.
Meanwhile, cash differentials for jet fuel JET-SIN-DIF widened to 27 cents a barrel to Singapore quotes on Friday, as against a 25-cents discount on Thursday.
Refining margins for jet fuel rose to $14.87 a barrel over Dubai crude during Asian trade, up from Thursday’s $14.22 a barrel.
INDIA DIESEL DEMAND
– India’s diesel consumption may rise to a record this year on increasing infrastructure spending by the current government as it tries to hold off challengers in general elections that will be held over April and May.
– Surging diesel consumption in India, the world’s third-largest oil user, underscores the country’s importance as a driver of global oil demand. Amid increasing concerns that crude demand growth may slip in 2019 because of slowing economic growth, India’s burgeoning fuel consumption may help underpin oil and fuel prices.
– Analysts at Fitch Solutions and consultants Wood Mackenzie forecast India’s diesel demand to rise in 2019 by 5.7 percent and 6.4 percent, respectively, from 2018. The country consumed a record 6.9 million tonnes of diesel a month in 2018, or about 1.7 million barrels per day (bpd),\ data from the Ministry of Petroleum showed.
– Indian sales of commercial vehicles, which largely run on diesel, rose to a record last year, and Jan. 2019 sales climbed to 87,600, a record high for this time of the year, according to data on Refinitiv Eikon.
– Gasoil stocks independently held in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub STK-GO-ARA slipped 0.8 percent to about 2.4 million tonnes in the week to Feb. 28, data from Dutch consultancy PJK International showed.
– Gasoil inventories fell as demand in inland markets remained steady but imports into the hub edged lower, PJK’s Lars van Wageningen said.
– ARA jet fuel inventories STK-JET-ARA fell 3.6 percent to 612,000 tonnes in the week to Thursday, PJK data showed.
– Compared with year-ago levels, jet fuel stocks were up about 7 percent, while gasoil inventories were about 17 percent lower.
SINGAPORE CASH DEALS
– One gasoil deal, no jet fuel trades.
– Trafigura sold 150,000 barrels of 10ppm gasoil to Vitol for March 20-24 loading, at a discount of 30 cents a barrel to Singapore quotes.
– Oil prices climbed on Friday as markets tightened amid output cuts by producer club OPEC, but surging U.S. supply and concerns of global economic slowdown kept a lid on further gains.
– Oil analysts have grown more pessimistic over the prospects for a significant price rally this year, as booming U.S. shale output and a deteriorating global economic backdrop threaten to offset the boost from OPEC’s crude supply cuts.
– Malaysia has raised the official selling price (OSP) of a basket of February-loading Malaysian crude oil grades to $69.43 a barrel, the highest in three months, Petronas said in a statement on Friday.
– Venezuela’s oil exports sank 40 percent in the first full month after the beginning of U.S. sanctions designed to oust Socialist President Nicolas Maduro, according to data from state-run oil firm PDVSA and Refinitiv Eikon.
ASSESSMENTS MID-DISTILLATES CASH ($/T) ASIA CLOSE Change % Change Prev Close RIC Spot Gas Oil 0.5% 80.58 0.91 1.14 79.67 GO-SIN GO 0.5 Diff -2.26 -0.01 0.44 -2.25 GO-SIN-DIF Spot Gas Oil 0.25% 81.06 0.94 1.17 80.12 GO25-SIN GO 0.25 Diff -1.78 0.02 -1.11 -1.80 GO25-SIN-DIF Spot Gas Oil 0.05% 81.97 0.93 1.15 81.04 GO005-SIN GO 0.05 Diff -0.87 0.00 0.00 -0.87 GO005-SIN-DIF Spot Gas Oil 0.001% 82.72 0.94 1.15 81.78 GO10-SIN GO 0.001 Diff -0.12 0.01 -7.69 -0.13 GO10-SIN-DIF Spot Jet/Kero 80.85 1.05 1.32 79.80 JET-SIN Jet/Kero Diff -0.27 -0.02 8.00 -0.25 JET-SIN-DIF
Source: Reuters (Reporting by Koustav Samanta; Editing by Keith Weir)