Asia Distillates-Margins near one-month high on prompt demand expectations

Asia’s middle distillates markets bounced back from the previous trading session, with gasoil refining margins at an almost one-month high following expectations of supportive near-term prompt demand to outweigh sufficient regional supplies.

Talks of some longer-than-expected refinery troubles in Southeast Asia emerged, buoying the market slightly as traders expected more prompt demand to be present for the remainder of June.

However, the remainder of the market stayed bearish as volumes for July loading are still likely to be sufficient to cover these requirements.

Refining margins for the fuel were back at almost $15 a barrel at the close of the market.

Spot market discounts for June and July cargoes continued to deepen despite a buy-sell gap in the market. Buyers were still unwilling to pay smaller discounts in the open trading market.

More buying interest emerged from regional importers such as Pertamina for June arrival cargoes, but markets were also waiting for offers from northeast Asian refiners to start.

Regrade narrowed slightly to dscounts of $1.33 a barrel.

SINGAPORE CASH DEALS

– No deals for both gasoil and jet fuel

INVENTORIES

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

– Middle distillates stocks at Fujairah Oil Industry Zone went back to a near two-month high of 3.724 million barrels for the week ended May 27, according to industry information service S&P Global Commodity Insights.

NEWS

– China’s services activity in May accelerated at the quickest pace in 10 months while staffing levels expanded for the first time since January, a private sector survey showed on Wednesday, pointing to sustained recovery in the second quarter.

– The U.S. could hasten the rate of replenishing the Strategic Petroleum Reserve as maintenance on the stockpile is completed by the end of the year, Energy Secretary Jennifer Granholm told Reuters on Tuesday.

– India plans to set up a new shipping company to expand its fleet by at least 1,000 ships in the next decade, as Asia’s third-largest economy seeks a bigger chunk of revenue from surging trade, two government officials said.

– Oil prices hovered near four-month lows on Wednesday on an expected supply boost later in the year when OPEC+ begins to unwind some output cuts, with markets also digesting U.S. jobs data and higher oil stocks.
Source: Reuters (Reporting by Trixie Yap; Editing by Janane Venkatraman)