Asia Distillates-Margins hover near 9-month low, supply-side pressures weigh

Asia’s middle distillates markets were plagued by a bout of slow market trading momentum before the Easter holidays, but signs of long supply still weighed on discussion levels, pushing margins close to a nine-month low.

April supplies remained readily available throughout, slightly out of earlier expectations, as some refiners were forced to sell more cargoes amid fewer term liftings.

There are some expectations of these cargoes to possibly head outside of Asia to regions such as South Americas again as Asian prices continue the downtrend, possibly widening arbitrage windows to the West.

The exchange of futures for swaps for April and May between Asia and Europe remained mostly unchanged at around $50 per metric ton, but swing refiners in the Middle East and India are likely to send more cargoes West given a lack of demand regionally.

Refining margins closed the week at the lowest point, slightly shy of $17 a barrel and down for the seventh straight week, reflecting the bearish market fundamentals.

Spot cash differentials for 10ppm sulphur gasoil recovered slightly on Friday and were stable week on week as physical discussions thinned towards the end of the week given the easter holidays.

Discussions for the aviation fuel also dipped because of higher-than-expected supplies from some China oil majors, with April spot cargoes still on offer this week.

The paper market shape continued in a contango, in line with the price structure in the West since the start of this week.

Regrade for April was little changed through the week, but values fell for the first time in three weeks – given the change in the paper market structure.

SINGAPORE CASH DEALS

– No deals for both fuels

INVENTORIES

– U.S. crude stocks and gasoline inventories rose while distillate inventories fell in the week ending March 22, the Energy Information Administration said on Wednesday.

– O/SING1

REFINERY NEWS REF/OUT

– U.S. private forecaster AccuWeather expects an above-average 2024 Atlantic hurricane season with a near-record number of storms and a greater than usual risk of direct impacts in parts of Florida, Texas and the Carolinas, it said on Wednesday.

– Russia’s Ryazan oil plant resumed operations at primary oil refining unit CDU-4 this week, increasing its total crude intake to 60% of normal capacity or 169,000 barrels per day (bpd), three sources told Reuters on Wednesday.

NEWS

– The European Union will have plenty of gas in stock next winter and the remaining buyers of Russian pipeline gas in central Europe are working on alternative imports in case transit via Ukraine stops from January, analysts and companies said.

– Russia has increased gasoline imports from neighbouring Belarus in March to tackle the risk of shortages in its domestic market because of unscheduled repairs at Russian refineries after drone attacks, four industry and trade sources said on Wednesday.

– The Biden administration on Wednesday awarded contracts to buy 2.8 million barrels of oil for the government’s emergency reserve for more than $81 a barrel, $2 above the target purchase price.
Source: Reuters (Reporting by Trixie Yap; Editing by Rashmi Aich)