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Asia Distillates-Jet fuel cash discount narrows, cracks gain

Asia’s cash discounts for jet fuel narrowed on Thursday, buoyed by an uptick in buying interest for physical cargoes, while refining margins for the aviation fuel inched higher on weaker feedstock crude prices.

Cash differentials for jet fuel JET-SIN-DIF were at a discount of 20 cents a barrel to Singapore quotes, their narrowest since Nov. 10. They were at a discount of 25 cents per barrel a day earlier.

Refining margins, or cracks, for jet fuel rose 34 cents to $4.35 per barrel over Dubai crude during Asian trading hours, hitting the highest since March 30.

The cracks have strengthened in recent weeks, thanks to seasonal heating demand for kerosene, and firming aviation demand from domestic routes.

Australia’s Qantas Airways said on Thursday its outlook had improved significantly because the country had reopened its state borders, with rising domestic capacity allowing the airline to start the process of repairing its pandemic-hit balance sheet.

The jet profit margins, however, are still more than 70% lower than their historical average for this time of the year, Refinitiv Eikon data showed.

The jet fuel market, which has taken the worst hit from the virus, is expected to gradually recover in coming quarters as more grounded flights return to the skies, but it would still take years for the fundamentals to go back to pre-crisis levels, market watchers said.

The prompt-month time spread for the aviation fuel in Singapore, which has been in a contango structure since March, traded at a discount of 41 cents per barrel on Thursday.

– Singapore’s middle distillate inventories rose 3.1% to 15.9 million barrels in the week to Dec. 2, according to Enterprise Singapore data.

– Weekly Singapore middle distillate inventories have averaged about 13.7 million barrels so far in 2020, Reuters calculations showed. This week’s stocks were 46.4% higher year-on-year.

U.S. distillate stockpiles rose by 3.2 million barrels in the week to Nov. 27, versus expectations for a 209,000-barrel drop, the U.S. Energy Information Administration data showed on Wednesday.

– No jet fuel deals, no gasoil trades

– Oil prices fell on Thursday as producers including Saudi Arabia and Russia locked horns over the need to extend record production cuts set in place during the first wave of the COVID-19 pandemic.

 CASH ($/T)             ASIA CLOSE       Change   % Change   Prev Close   RIC
 Spot Gas Oil 0.5%                51.70     1.20       2.38        50.50  GO-SIN
 GO 0.5 Diff                      -1.31     0.01      -0.76        -1.32  GO-SIN-DIF
 Spot Gas Oil 0.25%               52.00     1.20       2.36        50.80  GO25-SIN
 GO 0.25 Diff                     -1.01     0.01      -0.98        -1.02  GO25-SIN-DIF
 Spot Gas Oil 0.05%               52.15     1.20       2.36        50.95  GO005-SIN
 GO 0.05 Diff                     -0.86     0.01      -1.15        -0.87  GO005-SIN-DIF
 Spot Gas Oil 0.001%              52.81     1.22       2.36        51.59  GO10-SIN
 GO 0.001 Diff                    -0.20     0.03     -13.04        -0.23  GO10-SIN-DIF
 Spot Jet/Kero                    51.38     1.21       2.41        50.17  JET-SIN
 Jet/Kero Diff                    -0.20     0.05     -20.00        -0.25  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                                                                            
 LGO M1                                                                                  
 LGO M1/M2                                                                               
 LGO M2                                                                                  
 Crack LGO-Brent M1                                                                      
 Crack LGO-Brent M2

Source: Reuters (Reporting by Koustav Samanta;)

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