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Asia Distillates-Jet fuel at biggest spot discounts since Nov 2008

Thursday, 26 March 2020 | 00:00

Asia’s cash differentials for jet fuel plunged further on Wednesday to their biggest spot discounts in more than 11 years, hammered by stifled aviation demand due to the coronavirus pandemic.

Cash discounts for jet fuel JET-SIN-DIF were at $2.28 per barrel to Singapore quotes on Wednesday, the widest since November 2008. They were at a discount of $1.71 per barrel in the previous session.

Refining profit margins for jet fuel rose for a second consecutive session to $2.51 a barrel over Dubai crude during Asian trading hours on Wednesday, up from 62 cents per barrel a day earlier.

The Asian margins briskly turned negative for the first time in over a decade earlier this week, while jet fuel prices in New York fell to the lowest on record as demand for the fuel is anticipated to drop by as much as 70% in the second quarter.

Most international flights remain grounded as countries across the world restrict travel to stem the coronavirus pandemic, which has killed nearly 14,000 people and sickened more than 375,000 over the last few months.

The aviation fuel market would likely remain under pressure at least until the third quarter, assuming the spread of the virus is contained by then, trade sources and industry analysts said.

“The jet fuel market will not find support before June, but I’m hopeful for July,” said Sukrit Vijayakar, director of Indian energy consultancy Trifecta.

“I see demand returning to more normal levels in the third quarter and second-half of the year possibly even higher to make up for all the lost travel of the first half.”

Meanwhile, cash differentials for 10 ppm gasoil GO10-SIN-DIF widened their discounts to 31 cents per barrel to Singapore quotes on Wednesday, compared with a 23-cent discount in the previous session.

Refining margins, also known as cracks, for gasoil with 10 ppm sulphur content climbed to $10.26 per barrel over Dubai crude on Wednesday, up from $10.12 per barrel on Tuesday.

– Global airlines urged governments on Tuesday to speed up bailouts to rescue the air transport industry as they doubled their estimate of 2020 revenue losses from the coronavirus crisis to more than $250 billion.

– The industry is now contemplating months without flying. Many will not survive such a hammer blow to their finances. The International Air Transport Association (IATA) said without government support, up to half of airlines face possible bankruptcy in the coming weeks.

– Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 39.5% to 1.9 million barrels in the week to March 23, data via S&P Global Platts showed.

– Stocks of middle distillates in the Fujairah oil hub have averaged 3.1 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019, Reuters calculations showed.

– The weekly Fujairah middle distillate stocks were about 14% lower than a year earlier.

– U.S. crude oil inventories fell in the most recent week, along with gasoline and distillate stocks, data from industry group American Petroleum Institute showed on Tuesday.

– Distillate fuel inventories, which include diesel and heating oil, fell by 1.9 million barrels, in line with estimates.

– Vietnam’s Nghi Son Refinery and Petrochemical (NSRP) is offering for a spot sale of 40,000 kilolitres, about 251,000 barrels, of gasoil with a sulphur content of 50 ppm for April 10-12 delivery.

– The tender closes on March 30.

– No jet fuel trades, no gasoil deals

– Some ports in India including those owned by Adani Ports & SEZ Ltd have declared force majeure after Asia’s third-biggest economy announced a 21-day lockdown to prevent the spread of the coronavirus, documents seen by Reuters showed.

– China’s crude oil imports in the first two months of 2020 from top supplier Saudi Arabia rose 26% from a year earlier, while purchases from No. 2 supplier Russia gained 11%, Reuters’ calculations based on customs data showed on Wednesday.
Source: Reuters (Reporting by Koustav Samanta; Editing by Sherry Jacob-Phillips)

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