Asia middle distillates: Key market indicators for June 28-July 2
Asian middle distillate markets are entering the June 28-July 2 trading week on a steady-to-firmer note, with market sources in the gasoil sector awaiting fresh pricing cues while some respite could be seen in the jet fuel/kerosene sector as countries discuss possibilities of travel bubbles.
At 10:03 am Singapore time (0203 GMT), the ICE August Brent futures contract was up 43 cents/b (0.57%) to $76.15/b, from $75.72/b at the June 25 Asian close.
** The front-month July-August jet fuel/kerosene time spread was pegged at minus 27 cents/b at 0203 GMT June 28, narrowing 8 cents/b from the Asian close on June 25, S&P Global Platts data showed. The front month July-August time spread has been in a contango structure for 17 months amid weak demand, and was last seen in backwardation on Jan. 31, 2020.
** The FOB Singapore jet fuel/kerosene cash differential extended further declines and ended the week at minus 50 cents/b to Mean of Platts Singapore jet fuel/kerosene assessments on June 25, widening 19 cents/b week on week, Platts data showed.
** Singapore’s jet fuel exports surged 315.67% week on week to 67,613 mt in the week to June 23, mainly to Australia at 27,580 mt and Malaysia at 39,934 mt, Enterprise Singapore data showed. Jet fuel imports into Singapore rose to 39,466 mt, from 2.76 mt the previous week. The bulk of imports came from China at 39,456 mt.
** India’s jet fuel exports rose 54.8% month on month to 418,000 mt in May, latest Petroleum Planning and Analysis Cell data showed, amid a decline in domestic demand due to movement restrictions imposed to combat a second wave of COVID-19 infections. Domestic demand fell 36.3% over the same period to 413,000 mt in May, the lowest volume since August 2020.
** The Q3-Q4 jet fuel/kerosene swap spread, an indication of near-term sentiment, averaged minus 27 cents/b over June 21-25, widening 2 cents/b from an average of minus 25 cents/b the week before.
** The front-month July-August gasoil market structure was pegged at minus 2 cents/b at 0203 GMT June 28, narrowing 4 cents/b from the minus 6 cents/b assessed at the Asian close on June 25, Platts data showed.
** The front-month July Exchange of Futures for Swaps or EFS spread was pegged at minus $4.68/mt at 0203 GMT June 28, narrowing from minus $5.21/mt at the previous Asian close, Platts data showed.
** Market participants said they expect the Asian benchmark 10 ppm sulfur gasoil market to be fairly steady in the week ahead, amid largely stable demand and supply fundamentals. Traders said while a large portion of Asian gasoil volumes have remained stuck within the region on unviable East-West economics, an oversupply situation in Asia has been prevented by curtailed exports of gasoil from China as well as limited inflows from India and the Persian Gulf.
** The ultra-low sulfur gasoil market came under some downward pressure in the week ended June 25, with the cash differential for FOB Singapore 10 ppm sulfur gasoil cargoes falling to a two-week low of minus 8 cents/b to MOPS gasoil assessments. Platts data showed the cash differential of ULSD cargoes for loading from Singapore was last lower on June 11, 2021, at minus 16 cents/b to MOPS gasoil assessments. A regional trader said the downbeat sentiment was “probably because the market is now so thin that no one really wants to do anything”.
** The Q3-Q4 gasoil swap spread, an indication of near-term sentiment, averaged at plus 53 cents/b over June 21-25, widening 6 cents/b from an average of plus 59 cents/b the week before.