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Asia Distillates-Margins breach $16 per bbl despite thin open window activity

Asia’s middle distillates markets recorded gains in both prices and margins against a backdrop of prompt demand in paper markets, with the ICE gasoil futures market structure turning into a backwardation on the last trading day.

July discussions were underway in the physical markets, as some refiners concluded their spot tenders at the market’s close.

The market has mostly been supported by movements in the West these few sessions, one source said.

Refining margins closed the trading session at slightly above $16 per barrel, nearly a two-month high.

Spot market discounts narrowed by 7 cents as a reflection of the firmer prompt June paper prices and smaller contango between June and July.

A lack of deals continued for the third straight session, capping overall market fluctuations.

Slight gains in the east-west arbitrage provided support for Asian jet fuel markets, but some refiners are still expecting regional supplies to remain here given the risk in freight costs.

However, the price difference between Asia and the U.S. west coast started to thin due to the strength in Asian prices.

Regrade discounts, however, widened slightly to around 90 cents a barrel.

SINGAPORE CASH DEALS

– No deals for both fuels

INVENTORIES

– Middle distillates inventories at Fujairah Oil Industry Zone fell to a two-week low of 3.526 million barrels for the week ended June 10, according to industry information service S&P Global Commodity Insights.

– U.S. crude oil and gasoline inventories fell last week while distillates rose, according to market sources citing American Petroleum Institute figures on Tuesday.

NEWS

– China’s consumer inflation held steady in May while producer price declines eased, but the underlying trend suggests Beijing would need to do more to prop up feeble domestic demand and an uneven economic recovery.

– Global oil demand will peak by 2029 and begin to contract the next year, the International Energy Agency said on Wednesday, while oil supply capacity is due to vastly outpace demand by the end of the decade.

– Singapore, Asia’s oil hub, will be receiving this week its first low-sulphur straight-run fuel oil (LSSR) cargo exported from Nigeria’s new Dangote refinery, according to ship-tracking data and market sources.

– Global crude oil and oil products shipments taking the long route between Asia, the Middle East and the West is up 47% since attacks began on vessels using the shorter Red Sea route, the Energy Information Administration said on Tuesday.
Source: Reuters (Reporting by Trixie Yap; Editing by Devika Syamnath)

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