Asia Distillates-Margins extend gains for 2nd session despite thinning spot activity

Cracking margins for Asia’s middle distillates rose for the second consecutive trading session against a backdrop of softer crude futures and thinner spot activity in the open trading market.
January-loading cargoes were still being discussed at a discount differential of 20 cents to 40 cents a barrel, some trade sources said,referring to the northeast Asia-origin spot lots.
Cash differentials slipped into a deeper discount for the first time in this trading week, reflecting the flattish swaps market.
Refining margins for 10 ppm sulphur gasoil rose slightly to above $22.50 a barrel, while jet fuel refining margins hit almost $23 a barrel.
Regrade widened further to a premium of 40 cents a barrel, reflecting the continuously strong performance in jet fuel swaps. The physical price differential between jet fuel and 10ppm gasoil remained at above $3 a barrel as a result.
Discussions for arbitrage trades from Asia to the U.S. West Coast slowed down slightly as the east-west price differential narrowed significantly from last week and that limited the regrade’s uptrend.
SINGAPORE CASH DEALS
– No gasoil or jet fuel deals.
INVENTORIES
– U.S. crude oil and fuel inventories rose last week, according to market sources citing American Petroleum Institute figures on Tuesday.
– Middle distillates stocks at Fujairah Oil Industry Zone were at a five-month high of 3.197 million barrels for the week ended Dec. 4, according to industry information service S&P Global Commodity Insights.
REFINERY NEWS REF/OUT
– Sinopec’s 600028.SS Qingdao Petrochemical plant has resumed operation after shutting down for two months of maintenance, the refinery said in a statement on social media.
NEWS
– Top oil exporter Saudi Arabia on Tuesday lowered the price of its flagship Arab Light crude to Asian customers in January for the first time in seven months, sources familiar with the matter said, reacting to weakening premiums in the physical market amidst supply overhang concerns.
– There is plenty of hand-wringing on display at the COP28 climate conference in Dubai about the slow pace of reducing the consumption of fossil fuels to fight climate change. But one positive that delegates can point to is the growing fleet of electric vehicles worldwide that is already making a surprisingly big dent in demand.
Source: Reuters (Reporting by Trixie Yap; Editing by Janane Venkatraman)