Asia middle distillates: Key market indicators this week

The Asian middle distillates market is set to enter the week of Feb. 8 on a mixed footing. Exceptionally cold weather in North Asia has spurred heightened demand for kerosene, which industry sources noted has in turn been negated by severely weakened air travel demand.

The gasoil market firmed over Feb. 1-5 amid strong buying interest and expectations of lower supply on the back of lesser inflow from India and the Persian Gulf, coupled with ongoing discretionary refinery run cuts and maintenance.

ICE April Brent crude futures were up 43 cents/b at $59.81/b at 0300 GMT Feb. 8 from the 0830 GMT Asian close on Feb. 5.

JET FUEL/KEROSENE

** The balance February-March jet fuel/kerosene timespread was pegged at minus 22 cents/b at 0300 GMT Feb. 8, narrowing marginally from minus 23 cents/b at 0830 GMT Asian close Feb. 5.

** The FOB Singapore jet fuel/kerosene cash differential was steady week on week on the back of mixed fundamentals, and was assessed at minus 15 cents/b to Mean of Platts Singapore jet fuel/kerosene assessments on Feb. 5, edging up 5 cents/b week on week.

** Heating oil kerosene demand in Northeast Asia received a boost after Japan on Feb. 2 extended its month-long coronavirus-related state of emergency until March 7. The Japan Meteorological Agency’s latest month-long weather forecast released on Jan. 28 showed that Hokkaido in the north will experience temperatures, which are below the 30-year average until Feb. 28.

** Singapore Airlines posted a net loss of S$142 million ($106 million) for the third-quarter, even as net fuel costs were 77.3% lower on the year at $274 million, as border controls and travel restrictions amid new waves of COVID-19 continue to constrain international air travel demand, the flagship carrier said late Feb. 4.

** The Q2-Q3 quarterly jet fuel/kerosene swap spread — an indication of near-term sentiment — averaged minus 33 cents/b for the week of Feb. 1-5, up 22 cents/b from the previous week’s average of minus 55 cents/b.

GASOIL

** The balance February-March gasoil market structure was pegged at plus 5 cents/b at 0300 GMT, rising slightly from plus 4 cents/b at the Asian close on Feb. 5, Platts data showed.

** The February Exchange of Futures for Swaps spread was pegged at plus $2.62/mt at 0300 GMT Feb. 8, widening from an assessed plus $2.03/mt at the Feb. 5 close.

** The Asian gasoil market was seen holding steady for the week ahead, with firm buying sentiment still providing support to the overall complex. Lower freight rates have also boosted opportunities to move Asian gasoil, particularly from India and the Persian Gulf, toward the West. With less inflows expected for Asia, the tighter supply balance may work to shore up prices, some sources said.

** The pace of activity in the Asian gasoil market might slow slightly ahead of the Lunar New Year festivities this week. Some sources maintained exports from China were still high for February.

** The Q2-Q3 quarterly gasoil swap spread — an indication of near-term sentiment — averaged at plus 21 cents/b for the week of Feb. 1-5, up 29 cents/b from minus 8 cents/b from the previous week’s average of minus 8 cents/b.
Source: Platts