Asia Distillates-Markets weighed on by closed arb, limited regional cues

Asia’s middle distillates market remained weighed on by a closed east-west arbitrage window, for gasoil specifically, weakening ICE gasoil futures and uncertainties over the Russian ban amid limited regional demand-supply cues.

Refining margins GO10SGCKMc1 slipped again for the fourth straight session to slightly below $26 a barrel.

The narrower east-west arbitrage was “largely attributed to a softening on the European side thanks to the accumulation of stocks in ARA, currently at their highest level in over a month”, said Sparta Commodities analyst James Noel-Beswick.

The east-west arbitrage, typically measured by the exchanges of futures for swaps (EFS), was at a one-month low discount of $60 a ton after narrowing for five consecutive sessions.

The market’s backwardation structure narrowed to less than $3 a barrel given the clearing of October positions in the swaps market.

Spot premiums GO10-SIN-DIF also fell to almost a one-month low of around $1.97 a barrel, reflecting the lower prompt prices in the market.

Jet fuel refining margins JETSGCKMc1 declined at a slower pace than gasoil for a second consecutive session, despite a lack of activity, as an opened arbitrage to the U.S. West Coast remains a positive market driver.

Regrade JETREG10SGMc1 narrowed further to $2 a barrel as a result.

SINGAPORE CASH DEALS O/AS

– One gasoil deal, no jet fuel deal.

INVENTORIES

– U.S. distillate stockpiles USOILD=ECI, which include diesel and heating oil, fell by 1.3 million barrels in the week to 118.8 million barrels, versus expectations for a 300,000-barrel drop, the EIA data showed.

– Singapore’s middle distillates stockpiles hovered around a two-year high, tracking the decline in gasoil net exports, though a rise in jet fuel/kerosene net exports slowed down the overall inventory pile up, official data showed on Thursday. O/SING1

NEWS

– This year is on track to become the hottest year on record, with the global mean temperature to date this year 0.52 degrees Celsius higher than average, the European Union’s Copernicus Climate Change Service said on Thursday.

– A crude oil pipeline from Iraq through Turkey, which has been suspended for about six months, is ready for operations as of Wednesday and Ankara is prepared to begin shipments, Turkish Energy Minister Alparslan Bayraktar said on Thursday.

– Russian President Vladimir Putin has ordered the government to provide state funds to ensure a smooth heating season, including the introduction of regulated prices for fuel oil supplied for household heating in some regions, the Kremlin said on Thursday.

– Oil prices inched up on Thursday, clawing back some of the previous session’s big losses after an OPEC+ panel maintained oil output cuts to keep supply tight, though an uncertain demand outlook capped gains.
Source: Reuters (Reporting by Trixie Yap; Editing by Shailesh Kuber)