Asia Distillates-Muted trade persists despite upbeat jet fuel cracks, strength in regrade

Asia’s middle distillates markets continued to record muted trading activity ahead of the year-end closing despite gains in jet fuel cracking margins and a stronger regrade premium from the previous session.

Refining margins for 10 ppm sulphur gasoil were little changed on Wednesday, amid steady ICE gasoil futures.

Discount levels in the physical spot market GO10-SIN-DIF were less severe, reflecting the slight improvement in the backwardated swap price structure between December and January. A persistent buy-sell gap hampered deals and capped serious negotiations for physical cargoes.

Some India-based refiners are starting to offer more December-loading spot cargoes.

Jet fuel refining margins rose for the second straight day this week as markets took a positive cue from a larger decline in inventories in some northeast Asian regions such as Japan, with further expectations of improving demand from the heating sector ahead of winter.

Regrade surged further as a result and breached a new high of a premium of $1.20 a barrel for second consecutive trading session.

SINGAPORE CASH DEALS

– No deals for both fuels

INVENTORIES

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

– Middle distillates stocks at key storage area Fujairah Oil Industry Zone were at a four-month high of 2.656 million barrels for the week ended Nov. 27, according to industry information service S&P Global Commodity Insights.

REFINERY NEWS
– Chevron said on Tuesday it was normalizing operations at its 245,271 barrel-per-day refinery in Richmond, California, after an overnight power cut triggered the release of large flames and black smoke from smoke stacks.

 

NEWS

– Oil edged higher on Wednesday as investors turned cautious ahead of a crucial OPEC+ meeting to decide output policy in the coming months, while a supply disruption caused by a storm in the Black Sea provided a lift for prices.

– China’s manufacturing activity likely contracted for a second consecutive month in November, a Reuters poll showed on Wednesday, keeping alive calls for further stimulus measures as factory owners struggle for orders both at home and abroad.

– OPEC+ talks on 2024 oil policy are difficult, making a rollover of the previous agreement a possibility rather than deeper production cuts, four OPEC+ sources said on Tuesday.

– Russia has increased daily crude oil processing by almost 5% in the first three weeks of November from October’s average level, raising its output of gasoline and diesel, on which an export ban has been lifted, sources told Reuters on Tuesday.

– Russia’s transport ministry said on Wednesday that weather conditions in the Black Sea remained unfavourable for shipping and that restrictions at Russian seaports would remain in place until the weather improved, disrupting oil exports.
Source: Reuters (Reporting by Trixie Yap; Editing by Shinjini Ganguli)