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Asia middle distillates: Key market indicators for July 5-9

Asian middle distillate markets are entering the July 5-9 trading week on a steady-to-weaker note, with snap lockdowns in the region dampening demand recovery in the gasoil market while ongoing travel restrictions continue to erode demand in the jet fuel/kerosene sector.

At 10:15 am Singapore time (0200 GMT), the ICE August Brent futures contract was down 17 cents/b (0.22%) to $76.00/b, from $76.17/b at the July 2 Asian close.

Jet fuel/Kerosene

** The balance month July-August jet fuel/kerosene time spread was pegged at minus 27 cents/b at 0215 GMT July 5, narrowing 8 cents/b from the Asian close on July 2, S&P Global Platts data showed.

** The FOB Singapore jet fuel/kerosene cash differential extended further declines and ended the week at minus 47 cents/b to Mean of Platts Singapore jet fuel/kerosene assessments on July 2, narrowing 3 cents/b week on week, Platts data showed.

** Singapore’s jet fuel exports surged 315.67% week on week to 70,323 mt in the week to June 30, with a majority of these going to the Philippines at 23,967 mt and Australia at 19,587 mt, Enterprise Singapore data showed. Jet fuel imports into Singapore plunged to 14.41 mt, down from 39,466 mt the previous week, with the bulk of inflows coming from India at 11.17 mt.

** The Q4 2021-Q1 2022 jet fuel/kerosene swap spread, an indication of near-term sentiment, averaged minus 13 cents/b over June 28-July 2, narrowing 15 cents/b from an average of 27 cents/b the week before.


** The balance July-August gasoil market structure was pegged at plus 8 cents/b at 0203 GMT July 5, unchanged from the 0830 GMT Asian close on July 2, Platts data showed.

** The front-month July Exchange of Futures for Swaps or EFS spread was pegged at minus $4.15/mt at 0215 GMT July 5, widening from minus $3.52/mt at the previous Asian close, Platts data showed.

** Industry participants remained divided about the state of the market over the coming week, with some saying that while the complex jumped into a backwardation structure on July 2, regional lockdowns and uncertainty over the demand recovery path ahead for the middle distillate continued to weigh on sentiment. Other sources said the market’s shift into the positive terrain was a move in the right direction, given that steep cuts to gasoil export volumes from China from the second half of 2021 should have a tightening effect on regional balances.

** Still, Enterprise Singapore data for the week ending June 30 showed middle distillate stocks hovering at a seven-week high, with the jump driven by gasoil. While the city-state remained a net exporter of middle distillates, an analysis of the data showed that gasoil imports soared nearly 280% on the week, while exports rose just over 50% over the same period. In addition, spot supply volumes from South Korea emerged late last week, with GS Caltex offering two cargoes of 10 ppm sulfur gasoil and four cargoes of 500 ppm sulfur gasoil, all for loading over August. The tender closes July 5.

** The Q4 2021-Q1 2022 gasoil swap spread, an indication of near-term sentiment, averaged at plus 62 cents/b over June 28-July 2, widening 9 cents/b from an average of plus 53 cents/b the week before.
Source: Platts

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