Asia Distillates-Gasoil cracks rebound despite more October sellers

Asia’s 10 ppm sulphur gasoil cracking margins rebounded to around $32 a barrel against a backdrop of rising crude futures and mostly steady ICE gasoil futures, amid steady arbitrage differentials to northwest Europe.

More selling interest emerged for spot October lots from South Korea, in-line with earlier expectations, on steady supplies and production rates since maintenance plans are likely limited in the fourth quarter.

On the demand front, some shipping enquiries for Asian gasoil exports emerged from Latin America, owing to congestion at the Panama Canal – although it remains to be been if such a trade route would be lucrative given shipping costs and longer voyage time risks.

The arbitrage differential between Asia and northwest Europe, typically measured by the exchange of futures for swaps (EFS), was at a discount of $79 a ton for October and deemed slightly uneconomical for Asian sellers.

Cash differentials GO10-SIN-DIF rose to around $2.29 a barrel, despite ready prompt-loading cargo sellers in the market. October buying interest remained upbeat.

Jet fuel refining margins rose to slightly above $30 a barrel, tracking strength on the gasoil front.

Private negotiations for at least 5-6 spot cargoes from South Korean refiners have been ongoing in the past two days, three trading sources said. Some of the sellers are hoping to pull these cargoes to the West because of the lucrative margins.

One more cargo from northeast Asia is likely bound for northwest Europe, Kpler shiptracking data showed, due to wide arbitrage margins.

Regrade values were little changed at around a discount of $1.60 a barrel, like the past few days, given the strength in jet fuel demand from the West.

SINGAPORE CASH DEALS O/AS

– One gasoil deal, no jet fuel deal.

INVENTORIES

– U.S. crude oil stockpiles last week built for the first time in a month due to higher imports and as production recovered to pre-pandemic levels, while fuel inventories jumped as refineries boosted runs to their highest since early 2020, the Energy Information Administration said on Wednesday.

– Singapore’s middle distillates stock levels hit close to a six-month high of more than 9 million barrels as jet fuel/kerosene net exports were little changed despite rising gasoil net exports week on week, official data showed on Thursday.

REFINERY NEWS REF/OUT

– Mexico’s Dos Bocas refinery will work at full capacity this year, Energy Minister Rocio Nahle told local media on Wednesday, following production delays and mounting costs.

– The shutdown of Monroe Energy’s 185,000 barrel per day Trainer, Pennsylvania, refinery will begin Saturday at midnight, according to a source familiar with the matter.

– Taiwan’s CPC Corp will shut one of its crude distillation units (CDU) and several downstream units including an alkylation unit for maintenance and a steam cracker for repairs in the next few days, a company spokesperson said on Thursday.

NEWS

– The U.S. Energy Department has talked to oil producers and refiners to ensure stable fuel supplies at a time of rising gasoline prices, Jared Bernstein, head of the White House Council of Economic Advisers, said on Wednesday.

– Oil prices rebounded on Thursday as markets turned their attention back to a tighter crude supply outlook for the rest of 2023 with demand set to stay robust through to next year.

– Appetite for Iranian crude is growing in China, the world’s biggest oil importer, after the extension of supply cuts by Saudi Arabia and Russia boosted global prices LCOc1, while Tehran is stepping up output and exports despite U.S. sanctions.
Source: Reuters (Reporting by Trixie Yap; Editing by Sonia Cheema)