Asia Distillates-Markets turn volatile, premiums slip for 4th session

Asia’s middle distillates markets turned volatile as paper swap discussions ticked up amid the weakness in the futures sector and a downtrend in oil prices, with concerns of ample supply still weighing on overall trading sentiment.

There are some expectations that China’s major refiners may try to capitalise on more exports for March loading given the robust margins these two weeks, one China-based trading source said.

Exports were earlier estimated at around 1 million metric tons last week, data from consultancy Longzhong showed.

ICE gasoil futures declined by at least 2% at the end of Asia’s trading session, with the exchange of futures for swaps (EFS) value dropping by around $10 a ton from the previous session.

More offers emerged for 500ppm sulphur gasoil from South Korea as well, with SK Energy being the key seller.

There is a possibility of refiners focusing more on gasoil production now given the steeper regrade discounts in the past few weeks and wider discounts for March spot jet fuel cargoes – unlike a month earlier, one source said.

Spot cash premiums dipped again for the fourth-straight session to 42 cents a barrel, a reflection of the weak fundamentals and ready selling interest in the open spot market from two China oil majors.

A lack of physical cargo buyers weighed further on premiums.

Refining margins for the fuel closed the trading session at 6.5% lower from the previous session.

Offers emerged again from one key China major for end-March loading cargoes – in line with earlier expectations – as export margins remain attractive for them.

Regrade remained at discounts of slightly above $2 a barrel.

SINGAPORE CASH DEALS

– No deals for both fuels.

INVENTORIES

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

– Middle distillates stocks at Fujairah Oil Industry Zone were at a more than four-month low of 1.641 million barrels after slipping for two straight weeks for the week ended Feb. 26, according to industry information service S&P Global Commodity Insights.

REFINERY NEWS REF/OUT

– Motiva Enterprises was increasing production on the large coker at its 626,000 barrel-per-day (bpd) Port Arthur, Texas refinery, the nation’s largest, on Tuesday, said people familiar with plant operations.

NEWS

– China’s aviation fuel consumption is likely to expand 13.1% this year on a surge in passenger travel, but its crude oil imports may stay flat, according to forecasts by a research arm of state energy giant China National Petroleum Corp (CNPC).

– Oman’s newly inaugurated Duqm refinery, OQ8, may start processing more crude grades towards the end of the year with studies currently underway, CEO David Bird told Reuters.

– Global crude oil markets are expected to be fairly stable this year at around $80 a barrel, Russel Hardy, CEO of oil and gas trader Vitol, said on Tuesday.
Source: Reuters (Reporting by Trixie Yap; Editing by Shweta Agarwal)