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Spot gasoil premiums at near 2-mth high on likely short covering

Asia’s spot cash premiums for 10 ppm sulphur gasoil rose to a near two-month high of 56 cents a barrel as buying interest remained strong in the open trading market.

There was speculation of short covering following lower diesel production expected up to September from Australia’s Viva Energy after an accident during a planned maintenance.

Offers remained scant as heavy expectations of much fewer cargoes coming from the Middle East to Asia for July arrival stayed prevalent, given possibly better netbacks to northwest Europe after cracks there rose in the past week. This comes despite a closed east-west arbitrage on paper.

Separately, Taiwan’s Formosa Petrochemical Corporation (FPCC) sold off a 300,000-barrel 10 ppm sulphur gasoil cargo at a premium of 20-25 cents a barrel to Singapore quotes to a Chinese buyer.

Refining margins for 10 ppm sulphur gasoil likewise rose slightly to $15.90 a barrel at the close.

Regrade widened for the first time in almost a week to a discount of 73 cents a barrel, giving back nearly all its earlier gains as some participants turned slightly bearish after the Asia-US West Coast arbitrage narrowed.

SINGAPORE CASH DEALS

– No gasoil or jet fuel deal.

INVENTORIES

– U.S. crude oil stockpiles fell unexpectedly last week as refiners cranked out fuel to the highest level since 2019 during the Memorial Day holiday, the Energy Information Administration (EIA) said on Wednesday. Distillate stockpiles (USOILD=ECI), which include diesel and heating oil, rose by nearly 5.1 million barrels in the week, versus expectations of a 1.3 million barrel rise, the EIA said.

– Middle distillates stock levels at key trading hub Singapore rose to above 8 million barrels on lower overall net export volumes, with gasoil imports emerging from Qatar, official data showed on Thursday.

NEWS

– Tougher requirements for some ship insurers covering United Arab Emirates ships are aimed at boosting environmental safety, the UAE state news agency (WAM) reported, amid growing concerns over unregulated shipping.

– Oil fell on Thursday as worries about weakening demand in a global economic slowdown overshadowed a pending drop in supply resulting from Saudi Arabia’s pledged production cuts.

– India’s fuel demand in May rose 9.7% year-on-year, while diesel sales continued to climb to hit a fresh peak, data from the Petroleum Planning and Analysis Cell of the oil ministry showed.
Source: Reuters

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