Asia’s middle distillates markets for the week were mixed and driven by lingering freight cost concerns, sufficient Chinese supplies for February and limited regional buying interest.
Freight cost remained a key consideration this week for major refiners with leftover February spot sales, with regional and long-haul freight rates still posting stable-to-firm prices.
The cost to ship 40,000 metric tons of middle distillates rose by almost 10% within Asia week on week, though rates to ship up to 90,000 tons on a long-haul journey were almost unchanged.
Spot market premiums GO10-SIN-DIF continued to take the hit from these rising costs, slipping to a three-week low and falling 15% week on week, despite a mostly steady backwardated price structure.
The key issue is sellers are unwilling to sell lower since the market is still backwardated, but at the same time buyers are unwilling to pay due to other additional costs, one refinery source said.
Refining margins GO10SGCKMc1, JETSGCKMc1 for both middle distillates fuels gained however by 11-12% week on week.
Ample supplies from several exporters including China and overall limited regional demand weighed on the jet fuel markets, with refining margins and regrade discounts declining week on week.
Arbitrage windows to both the U.S. West Coast and northwest Europe remained slightly opened, limiting overall market weakness.
Regrade JETREG10SGMc1 were little changed at discounts of around $3 a barrel, maintaining at a more than three-month low.
SINGAPORE CASH DEALS O/AS
– No gasoil deal, one jet fuel deal.
INVENTORIES
– Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose by around 15.5% in the week to Thursday to 1.958 million metric tons, according to data from Dutch consultancy Insights Global.
REFINERY NEWS REF/OUT
– TotalEnergies TTEF.PA restarted the cogeneration unit and was working to clear the coker ahead of restarting production at its 238,000-barrel-per-day (bpd) Port Arthur, Texas refinery, people familiar with plant operations said on Thursday.
– BP BP.L was purging its 435,000 barrel-per-day (bpd) Whiting, Indiana, refinery of hydrocarbons on Thursday after a transformer failure caused a plant-wide power outage and forced an evacuation of all but the most essential workers, said people familiar with plant operations.
NEWS
– South Korea’s S-Oil 010950.KS, whose main shareholder is Saudi Aramco 2222.SE, forecast on Friday that 2024 refining margins will maintain at an above-average level helped by steady demand growth and low inventories.
– Oil prices rose on Friday following a decision by OPEC+ to keep its oil output policy unchanged, although benchmarks were headed for weekly losses amid unsubstantiated reports of a ceasefire between Israel and Hamas.
Source: Reuters (Reporting by Trixie Yap; editing by David Evans)