Asia middle distillates: Key market indicators this week
The Asian middle distillates complex in the week started April 11 would likely see mixed market sentiment. Gasoil continues to face pressure from growing supply and uneven demand even though an upward momentum was seen in the previous week from buyers looking to meet prompt requirements.
The jet fuel market has seen little improvement on the back of curtailed flight operations as governments enforced strict COVID-19 travel restrictions. Industry sources noted some positive indicators could emerge as governments begin to adopt different strategies in tackling the pandemic.
** The balance April-May jet fuel/kerosene time spread was pegged at minus 42 cents/b at 0300 GMT April 12, widening 3 cents/b from minus 39 cents/b at the 0830 GMT Asian close on April 9, S&P Global Platts data showed.
** The FOB Singapore jet fuel/kerosene cash differential was seen relatively steady, albeit remaining in discount territory, and was assessed at minus 61 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessments on April 9, falling 1 cent/b from the beginning of the week.
** Japan’s jet fuel stocks rose 0.6% week on week at 4.82 million barrels on April 3, the Petroleum Association of Japan said on April 7. Kerosene stocks fell 6% week on week at 9 million barrels in the same week.
** Jet fuel shipments from the Persian Gulf and India to Europe improved marginally in March from February, with four LR1s and four LR2s taken for jet fuel deliveries into Europe amid a pickup in domestic airline travel capacity.
** The third quarter-fourth quarter jet fuel/kerosene swap spread — an indication of near-term sentiment — averaged minus 55 cents/b April 5-9, narrowing 22 cents/b from the previous week’s average of minus 77 cents/b.
** The balance April-May gasoil market structure was pegged at minus 15 cents/b at 0300 GMT April 12, unchanged from the Asian close on April 9, Platts data showed.
** The April Exchange of Futures for Swaps spread was pegged at minus $4.02/mt at 0300 GMT April 12, widening from an assessed minus $3.73/mt at the April 9 close.
** Asian gasoil traders said the market may revert to the lull it had been experiencing in early April following a period of bullishness seen over the past week, fueled by buying efforts for meeting prompt requirements from refinery issues in Japan, as well as to bulk up newbuild VLCCs with barrels. “Yes, it should [revert to normal] if the buying stops for the VLCCs,” a Singapore-based trader said.
** Supply remains plentiful. Latest data from government agency Enterprise Singapore showed that a significant volume of gasoil flowed into the city-state for the week ended April 7, so much so that Singapore flipped to a net import position. The data showed that while gasoil outflows in April 1-7 rose 17.62% at 386,383 mt, inflows surged 313.84% over the same period at 388,873 mt. The gains were led by a sharp increase in gasoil brought from China, India and Malaysia, which contributed 108,411 mt, 105,380 mt and 87,995 mt, respectively. Also of note were inflows from the UAE, which sent across 70,884 mt.
** The Q2-Q3 gasoil swap spread — an indication of near-term sentiment — averaged plus 3 cents/b April 5-9, up 20 cents/b from the previous week’s average of minus 17 cents/b.