Asia Distillates-Markets continue decline, cash discounts at record low

Asia’s middle distillates markets recorded a declining price trend again, tempered by softer paper swaps performance and weaker ICE gasoil futures movement, despite traders’ consistent stance on tightening supplies soon and upbeat trading liquidity.

Several India-based refiners kickstarted their October sales activity, though September selling interest remained equally brisk.

On the window, spot cash markets continued to trade in the discount range with levels widening to a record low level since the last quarter of 2020.

Offers were readily available, but buying interest stayed tepid.

Refining margins, however, recovered slightly to around $13.25 a barrel, as crude markets fell by a larger degree in comparison

Jet fuel spot activity was upbeat, both on the paper and physical markets front – with window trade volumes totalling 229,000 barrels.

Physical deals have been done on the window for three consecutive trading sessions, with this week’s deals so far at 429,000 barrels for Sept. 18 to Oct. 4 loading. Trading house UIT is the biggest buyer for now, while Gunvor is a key seller.

Regrade widened further to a discount of 37 cents a barrel, given a lack of firm support for jet fuel paper swaps and strong selling activities in the market.

SINGAPORE CASH DEALS

– Two jet fuel deals, no gasoil deal.

INVENTORIES

– U.S. crude oil and gasoline stockpiles were expected to have fallen last week, while distillate inventories likely rose, a preliminary Reuters poll showed on Tuesday. EIA/S

– Middle distillates stocks at Fujairah Oil Industry Zone slipped for a second straight week to 2.356 million barrels in the week ended Sept. 2, according to industry information service S&P Global Commodity Insights.

REFINERY NEWS REF/OUT

– Valero Energy Corp began restarting the large crude distillation unit (CDU) at its 360,000 barrel-per-day (bpd) Port Arthur, Texas, refinery on Tuesday, said people familiar with plant operations.

NEWS

– Weather forecasters who produce Colorado State University’s closely watched hurricane outlooks said on Tuesday tropical storm activity in the first week of September would likely be below average.

– Growth in China’s services sector activity slowed in August despite the summer travel peak, prompting some firms to cut staff amid concerns about rising costs, a private-sector survey showed on Wednesday.

– Russia’s federal antimonopoly service sees no grounds for reinstating a ban on diesel fuel exports, its deputy head Vitaly Korolev said on Wednesday.
Source: Reuters (Reporting by Trixie Yap; Editing by Shailesh Kuber)