Gasoil spot premiums firm; jet fuel cracks fall on weak demand outlook

Asia’s spot premiums for 10 ppm sulphur gasoil received support and rose for the third straight session on Wednesday, to 27 cents per barrel from a bout of open market buying for June parcels against a backdrop of zero offers.

Sellers were waiting for a clearer outlook on demand-supply fundamentals for July before they offer.

Separately, 10 ppm sulphur gasoil margins continued to trade sideways in the $14 and $15 per barrel range as thin liquidity in the swaps market continued for a third consecutive day.

Jet fuel refining margins were weighed on by weak demand outlooks, particularly from China. They slumped to below $13 a barrel at the market’s close.

Asian jet fuel demand declined by 0.2% on week, and while China’s number of flights remained stable from last week, there is some cause for concern, said StoneX analyst Harry Altham in a client note.

“In particular, there continues to be relatively sluggish appetite for international travel, with only 2,300 international flights per week currently scheduled, much of that short-haul.”

Regrade widened to a discount of $1.55 a barrel as a result.

SINGAPORE CASH DEALS

– No gasoil or jet fuel deal.

INVENTORIES

– U.S. crude oil and gasoline stockpiles were seen falling last week, while distillate inventories likely increased, a preliminary Reuters poll showed on Tuesday. Analysts estimated stockpiles of gasoline USOILG=ECI fell by about 200,000 barrels last week, while distillate, which include diesel and heating oil, increased by about 1.1 million barrels.

– Middle distillate stockpiles at Fujairah Oil Industry Zone were down about 16.9% at 3.928 million barrels for the week ended May 29, according to industry information service S&P Global Commodity Insights.

NEWS

– China’s factory activity shrank faster than expected in May on weakening demand, heaping pressure on policymakers to shore up a patchy economic recovery and knocking Asian financial markets lower.

– Top oil exporter Saudi Arabia may further slash the official selling prices (OSPs) for all crude grades to Asia by $1 a barrel in July, a Reuters poll showed, despite the looming OPEC+ meeting that could leave the door open to further output reduction.

– Russia’s offline primary oil refining capacity is expected to fall by 38% in June from May to 3.05 million tonnes, industry sources said and Reuters calculations showed on Tuesday.

– Russia’s exports of ultra-low sulphur diesel (ULSD) from the Baltic Sea port of Primorsk were revised up by 10% in May, or by 120,000 tonnes against the previous plan, to 1.3 million tonnes, traders said and Refinitiv data showed on Wednesday.
Source: Reuters