Asia Distillates-Markets weaken amid lengthy supply; jet fuel paper turns contango

Asia’s middle distillates markets weakened further as liquidity thinned in the open trading market amid fewer spot tenders being discussed, with month-on-month declines in April-loading diesel from China expected for now.

China-origin exports will likely hit between 700,000 and 800,000 metric tons for diesel and 1.8-1.9 million tons for jet fuel, three trades sources said.

The export numbers arelikely a dip from expected March-loading volumes since domestic sales have been rising over the last two weeksahead of stronger demand during the spring harvesting season from the agricultural and fishing industry, they added.

There could still be some volume changes if domestic sales continue to be strong, one of the sources said.

On the spot tenders front, activity slowed down slightly after major refiners had cleared their April-loading sale requirements and retreated back to the sidelines. Earlier deals last Friday closed at discounts of up to $2 a barrel for mostly South Korea-origin cargoes.

Refining margins GO10SGCKMc1 dipped further below $18 a barrel as a reflection of the lengthy supply in the market, remaining at more than an eight-month low.

Spot market discounts GO10-SIN-DIF dipped further to almost 40 cents a barrel as the market’s backwardation narrowed further again.

Jet fuel market activity also slowed down slightly after several majors sold off their April-loading cargoes last week at discounts of up to $2 a barrel as well.

The paper swaps market turned into a contango shape – for the first time since June last year, reflecting the prompt market weakness amid ample April supplies.

Regrade widened further to slightly above $1.80 a barrel as a result.

SINGAPORE CASH DEALS

– No deals for both fuels.

REFINERY NEWS REF/OUT

– Production at TotalEnergies’ 238,000-barrel-per-day (bpd) Port Arthur, Texas refinery was reduced and the small crude distillation unit (CDU) shut following a fire on Friday morning, said people familiar with plant operations.

– Rosneft ROSN.MM-owned Kuibyshev oil refinery in Russia’s Samara halted its CDU-5, one of two primary refining units, following a drone attack over the weekend, two industry sources told Reuters on Monday.

NEWS

– Sinopec Corp 0386.HK bought some Russian oil last year based on operational needs, but it accounted for a “tiny percentage” of its overall demand, company president Yu Baocai said on Monday.

– China Petroleum & Chemical Corp, known as Sinopec, reported a 9.9% decline in 2023 net profit on Sunday, weighed by falling oil and gas prices but supported by recovering fuel demand.

– Oil prices rose in Asian trading on Monday on concerns over tighter global supply brought about by escalating conflicts in the Middle East and between Russia and Ukraine, while a shrinking U.S. rig count added to upward price pressure.

– Russian Urals oil loadings have been set at 1.4 million metric tons during April 1-6, unchanged from March 1-6, according to two trading sources citing the preliminary schedule.
Source: Reuters (Reporting by Trixie Yap; Editing by Tasim Zahid)