Asia’s middle distillates markets were mixed after last week’s sell-off as trade sources were awaiting a clearer demand-supply direction, pending unexpected outages in the Middle East and volatile ICE gasoil futures movement.
Refining margins surged by almost 14% from the previous session to close at almost $23.50 a barrel, tracking overnight gains in the West as well – despite a closed east-west arbitrage spread discount of $30-40 per metric ton.
Some term negotiations for 2024 10ppm sulphur gasoil deliveries were still under way, with premiums at below $1 a barrel – lower than levels this year – for northeast Asia-origin cargoes, at least three sources said.
Buyers in south Asia such as Bangladesh and Sri Lanka also emerged with tenders seeking January-to-June deliveries of gasoil and jet fuel next year.
Spot cash differentials flipped to a discount for the first time since mid-May as ready sellers in the market for end-November and December were easily available, against a backdrop of a contango-shaped market structure between December and January swap prices.
Jet fuel refining margins also gained, tracking the uptrend in gasoil cracks, but overall trading activity remained muted.
Concerns on winter demand capped jet fuel market strength, with some sources saying both heating and aviation demand could be tepid for December.
International seat capacity numbers for outbound flights from China in November remain at 57% of pre-pandemic levels, data from aviation analytics firm OAG showed.
Regrade widened slightly to a discount of more than $1 a barrel.
SINGAPORE CASH DEALS
– No deals for both fuels.
REFINERY NEWS
– Operations at ExxonMobil’s barrel per day Beaumont, Texas, refinery, the nation’s second largest, were back to normal on Monday following a brief power interruption on Friday, said people familiar with plant operations.
NEWS
– The U.S. Treasury Department has sent notices to ship management companies requesting information about 100 vessels it suspects of violating Western sanctions on Russian oil, according to a source who has seen the documents.
– The U.S. plans to buy 1.2 million barrels of oil to help replenish the Strategic Petroleum Reserve after it sold off the largest amount ever last year, the Energy Department said on Monday.
– Oil prices inched up on Tuesday on expectations of healthy market fundamentals, following an OPEC report saying demand remains strong, and concerns that supplies might be disrupted as the U.S. cracks down on Russian oil exports.
Source: Reuters (Reporting by Trixie Yap; Editing by Pooja Desai)