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Asia Distillates-Gasoil cash discount narrows, cracks dip

Saturday, 21 November 2020 | 01:00

Asia’s cash differentials for 10 ppm gasoil gained on Friday backed by a firmer deal in the physical market, while refining margins for the industrial fuel dipped amid concerns that near-term supplies would likely outweigh demand.

Cash differentials for gasoil with 10 ppm sulphur content GO10-SIN-DIF were at a discount of 13 cents a barrel to Singapore quotes on Friday, compared with a 14-cent discount on Thursday.

Refining profit margins, also known as cracks, for 10 ppm gasoil slipped 8 cents to $4.97 a barrel over Dubai crude during Asian trading hours. The cracks, however, have gained 6.7% this week.

With surging COVID-19 cases and renewed lockdowns in several countries, the industrial and transportation demand will come under further pressure, trade sources said.

The front-month time spread for 10 ppm gasoil, which has remained in a contango structure since early August, traded at a discount of 14 cents per barrel on Friday, Refinitiv Eikon data showed.

The regional gasoil market, currently grappling with supplies also due to lack of arbitrage opportunities to Europe, is expected to receive additional supplies from China over the next few weeks, which would worsen the glut, market watchers said.

The exchange of futures for swaps (EFS), which determines the gasoil price spread between Singapore and Northwest Europe, traded around minus $3 per tonne on Friday, typically making it unworkable for arbitrage shipments.

Arbitrage is usually profitable when the EFS trades at about minus $15 a tonne or below, though it also depends on other factors such as freight rates, according to traders.

– Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub STK-GO-ARA dropped 7.9% to 2.4 million tonnes in the week to Nov. 19, data from Dutch consultancy Insights Global showed.
– The data showed ARA jet fuel inventories STK-JET-ARA fell 4.4% to 1.1 million tonnes.

– One gasoil deal, no jet fuel trades

 CASH ($/T)             ASIA CLOSE       Change   % Change   Prev Close  RIC
 Spot Gas Oil 0.5%                47.80     0.08       0.17       47.72  GO-SIN
 GO 0.5 Diff                      -1.14    -0.01       0.88       -1.13  GO-SIN-DIF
 Spot Gas Oil 0.25%               48.17     0.10       0.21       48.07  GO25-SIN
 GO 0.25 Diff                     -0.76     0.02      -2.56       -0.78  GO25-SIN-DIF
 Spot Gas Oil 0.05%               48.40     0.08       0.17       48.32  GO005-SIN
 GO 0.05 Diff                     -0.54    -0.01       1.89       -0.53  GO005-SIN-DIF
 Spot Gas Oil 0.001%              48.81     0.10       0.21       48.71  GO10-SIN
 GO 0.001 Diff                    -0.13     0.01      -7.14       -0.14  GO10-SIN-DIF
 Spot Jet/Kero                    46.56     0.23       0.50       46.33  JET-SIN
 Jet/Kero Diff                    -0.41     0.01      -2.38       -0.42  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 Amy Caren Daniel)

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