Asia Distillates-Markets soften, cautiousness evident for May fundamentals

Asia’s middle distillates markets softened on Tuesday, amid swap price volatility through the day, as mostly cautious-to-bearish expectations for May fundamentals took centre stage.

Several spot cargoes were still discussed at discounts, despite the paper market structure recovering slightly to a backwardation, reiterating the overall bearish near-term fundamentals.

Price weakness in the West, which has narrowed the East-West arbitrage in the past four trading sessions, exacerbated the bearishness further. This comes against a backdrop of volatile clean tanker freights.

The exchange of futures for swaps for June remained at discounts of around $38 per metric ton, while freight for long-range and medium range vessels from northeast Asia to Europe hovered close to $60 per metric ton.

The market has not really been catching up with crude prices these two sessions given mostly unchanged fundamentals and a lack of clarity in May demand.

Refining margins GO10SGCKMc1 slipped to around $17 a barrel, tracking the overall cautious market sentiment and limited paper swap price fluctuations.

Cash differentials GO10-SIN-DIF were little changed for the second straight session at a discount of around 16 cents per barrel, with discussions in a wide buy-sell gap.

Refiner sales for May cargoes were impacted by overall limited regional demand and thin economical incentives for sellers to send their cargoes West.

One South Korean refiner failed to sell a third spot lot via a sales tender last Friday and may reoffer in the coming days, three sources say.

Regrade narrowed slightly to a discount of $1.40 a barrel, given the late afternoon weakness in gasoil futures prices.

SINGAPORE CASH DEALS

– No gasoil deal, one jet fuel deal

INVENTORIES

– U.S. crude stockpiles and distillates stockpiles were seen rising last week, while gasoline likely drew down, a preliminary Reuters poll showed on Monday. EIA/S

REFINERY NEWS REF/OUT

– Russia has been able to swiftly repair some of key oil refineries hit by Ukrainian drones, reducing capacity idled by the attacks to about 10% from almost 14% at the end of March, Reuters calculations showed.

NEWS

– China’s oil refinery throughput rose in March as refiners stepped up runs amid signs of a tentative economic recovery in the world’s second largest consumer of crude.

– Singapore has the potential to supply over 1 million metric tons of low-carbon methanol annually by 2030 to meet rising demand for alternative bunker fuel, a Singapore minister said on Tuesday.

– Italian energy group Eni aims to sell by year-end minority stakes in its biofuel and bio-plastic units that could fetch around 1.3 billion euros in total to speed up its energy transition, three sources said.

– Oil prices rose on Tuesday after data showed China’s economy grew faster than expected, while heightened tensions in the Middle East also kept markets on edge after Israel said it would respond to Iran’s weekend missile and drone attack.

– China’s air passenger numbers rose 37.7% year-on-year to nearly 180 million trips in the first quarter, marking the highest first-quarter passenger volume ever.
Source: Reuters (Reporting by Trixie Yap; Editing by Mrigank Dhaniwala)