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Asia Distillates-Gasoil cash differentials flip to premium after nearly 6 months

Thursday, 04 February 2021 | 01:00

Asia’s cash differentials for 10 ppm gasoil flipped to a premium on Wednesday, for the first time in nearly six months, buoyed by active buying interest for physical cargoes.

Cash differentials for gasoil with 10 ppm sulphur content GO10-SIN-DIF rose to a narrow premium of 1 cent a barrel to Singapore quotes, a level not seen since Aug. 7. They were at a discount of 1 cent per barrel on Tuesday.

The February/March time-spread for 10 ppm gasoil in Singapore, which turned to a backwardation this week, traded at a premium of 2 cents per barrel, Refinitiv Eikon data showed.

In backwardation, the prompt-month contract is more expensive than subsequent months. This makes it uneconomical to store the product and leads to a drawdown in stocks, which in turn is usually seen as a sign that prices are likely to head higher in future months.

Lack of arbitrage opportunities and currently high refining run rates in the region, however, could result in abundant supplies and weigh on short-term fundamentals before the spring turnaround season kicks in, trade sources said.

Refining margins or cracks for 10 ppm gasoil rose 7 cents to $6.61 a barrel over Dubai crude during Asian trading hours, the strongest level since July last year. The cracks for the benchmark gasoil grade have surged 18.7% in the past week.


– Middle-distillate inventories in the Fujairah Oil Industry Zone rose about 15% to 5.2 million barrels in the week ended Feb. 1, data via S&P Global Platts showed.

– The weekly stocks in Fujairah have averaged 4.5 million barrels so far this year, compared with weekly averages of 4.2 million barrels in 2020, and 2.4 million barrels in 2019, Reuters calculations showed.

– U.S. distillate fuel inventories, which include diesel and heating oil, fell by 1.6 million barrels in the week to Jan. 29, compared with analysts’ expectations for a draw of 429,000 barrels, data from industry group the American Petroleum Institute showed on Tuesday.

– Three gasoil deals, one jet fuel trade

– Oil prices rose on Wednesday after hitting their highest in about a year in the previous session, boosted by an unexpected draw in U.S. crude and gasoline stocks, fuelling demand recovery hopes as OPEC+ forecasts the market will be in deficit in 2021.

 CASH ($/T)            ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%               62.25     1.02       1.67       61.23  GO-SIN
 GO 0.5 Diff                     -1.62    -0.02       1.25        -1.6  GO-SIN-DIF
 Spot Gas Oil 0.25%              62.35     1.02       1.66       61.33  GO25-SIN
 GO 0.25 Diff                    -1.52    -0.02       1.33        -1.5  GO25-SIN-DIF
 Spot Gas Oil 0.05%              62.62     1.02       1.66        61.6  GO005-SIN
 GO 0.05 Diff                    -1.25    -0.02       1.63       -1.23  GO005-SIN-DIF
 Spot Gas Oil 0.001%             63.88     1.06       1.69       62.82  GO10-SIN
 GO 0.001 Diff                    0.01     0.02    -200.00       -0.01  GO10-SIN-DIF
 Spot Jet/Kero                   61.23     1.16       1.93       60.07  JET-SIN
 Jet/Kero Diff                   -0.11     0.06     -35.29       -0.17  JET-SIN-DIF
 Brent M1                                                                               
 Gasoil M1                                                                              
 Gasoil M1/M2                                                                           
 Gasoil M2                                                                              
 Regrade M1                                                                             
 Regrade M2                                                                             
 Jet M1                                                                                 
 Jet M1/M2                                                                              
 Jet M2                                                                                 
 Gasoil 500ppm-Dubai                                                                    
 Cracks M1                                                              
 Gasoil 500ppm-Dubai                                                                    
 Cracks M2                                                              
 Jet Cracks M1                                                                          
 Jet Cracks M2                                                                          
 East-West M1                                                                           
 East-West M2                                                                           
 LGO M1                                                                                 
 LGO M1/M2                                                                              
 LGO M2                                                                                 
 Crack LGO-Brent M1                                                                     
 Crack LGO-Brent M2

Source: Reuters (Reporting by Koustav Samanta; Editing by Sherry Jacob-Phillips)

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