Asia’s middle distillates markets recorded more spot sale tenders from major Chinese oil firms on Tuesday, while trading activity in the open markets on a physical and paper swap basis turned muted.
Spot market activity ticked up in the form of sale tenders, with at least two Chinese oil majors resurfacing and offering February shipments of jet fuel and gasoil.
Stable and high freight costs on regional routes such as from northeast to southeast Asia could weigh on discussions and spot discounts for these cargoes, one source said.
Uncertainties on a sustained near-term price rally capped the pace of trading momentum, though some traders were keeping their positions lean due to the current market volatility that is not fully dependent on demand-supply fundamentals.
Refining margins GO10SGCKMc1 for the transport and industrial fuel closed the session slightly above $25.50 a barrel.
Spot market premiums GO10-SIN-DIF for mostly February parcels slipped as more lower-priced sellers emerged, even for 500ppm sulphur gasoil cargoes. Premiums dipped by more than 10 cents from the previous session both grades of gasoil.
For jet fuel, the arbitrage window from Asia to the U.S. West Coast stayed open even at the month-end, sparking some talks that sellers could start exploring this trade route in the near-term if the spread remains wide.
Regrade JETREG10SGMc1 remained almost steady day on day at a discount of $2.80 a barrel.
SINGAPORE CASH DEALS O/AS
– No deals for both fuels.
INVENTORIES
– Analysts in a Reuters poll estimated stockpiles of gasoline USOILG=ECI were up by about 1.7 million barrels last week, while distillate stockpiles USOILD=ECI, which include diesel and heating oil, were seen decreasing by about 500,000 barrels.
NEWS
– China’s independent refiners are holding off from buying Iranian crude oil for February as a stand-off over pricing and terms enters a second month, trading sources said.
– Saudi Aramco 2222.SE on Tuesday said it was asked to cut its planned maximum sustainable oil production capacity to 12 million barrels a day (bpd), having raised it to 13 million bpd almost four years ago.
– India’s exports of low-sulphur diesel to Europe are poised to hit a fresh two-year low in January, after an unprecedented high last month, as Red Sea security risks drive up freight costs, trade sources and analysts say.
Source: Reuters (Reporting by Trixie Yap; Editing by Varun H K)