Asia’s 10-ppm sulphur gasoil cracking margins ticked up for the third straight session, against a backdrop of continuous supply concerns from China and Russia despite thinner spot trading liquidity at month-end.
The margins GO10SGCKMc1 rose to $32.79 a barrel, and were also up 3.4% week-on-week.
The ban on Russian exports barrels remained the talk of the market, with the duration of the ban by Kremlin still up in the air.
However, the east-west arbitrage spread narrowed from last week as trade sources believed it to be short-lived on rising domestic stockpiles, a lack of commercial storage space of more than two weeks and repercussions on crude runs.
“At the core of the problem is an impasse between the government and Russia’s oil companies over an optimal formula for fuel subsidies that would guarantee a well-supplied domestic fuels market, while saving money for the government without dramatically worsening the finances of oil refiners,” JP Morgan analysts said in a client note.
Uncertainty on China’s exports for the fourth quarter also spurred gains in the futures market, which in turn supported swap and physical price discussions.
Demand, however, was mostly steady, though some southeast Asian buyers did resurface with buying interest for prompt-loading cargoes.
Gains on the cash premiums GO10-SIN-DIF for October spot parcels were evident through the week, hitting an eight-month high, tracking the wider prompt-forward market backwardation. Buyers had to pay higher premiums for earlier loading cargoes.
Discussions for jet fuel was brisk as several northeast Asian refiners came out for their October discussions, with the east-west arbitrage still wide opened.
One more 40,000 metric ton cargo has been loaded from South Korea to the U.S. West Coast, Kpler shiptracking data showed. Around 280,000 tons of spot jet fuel for September loading from northeast Asia is bound for the U.S. West Coast, according to the data.
Price support however was capped by the ready spot availability and regrade JETREG10SGMc1 widened as a result to a discount of $3.90 a barrel.
SINGAPORE CASH DEALS O/AS
– No deals for both jet fuel and gasoil.
INVENTORIES
– Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub increased by about 4% in the week to Thursday as imports continued to rise, data from
NEWS
– Record volumes of refined products were shipped from Singapore to Mexico in the third quarter on lower U.S. exports to the Latin American country caused by peak summer demand and slow shipping through the Panama Canal, industry sources and analysts say.
– Russia may introduce quotas on overseas fuel exports if a complete export ban imposed last week does not succeed in bringing down persistently high gasoline and diesel prices, its Deputy Prime Minister Alexander Novak said.
Source: Reuters (Reporting by Trixie Yap; Editing by Varun H K)