Asia’s middle distillates markets spot activity increased pace after several refiners kickstarted their July discussions, while regrade discount hit a near six-month low as jet fuel fundamentals continued to strengthen.
At least two South Korean refiners were out offering their July spot cargoes, in line with earlier market expectations, and traders were awaiting to see how much would be sold these few days to gauge refinery runs there.
Meanwhile, prompt demand also emerged from some spot buyers in southeast Asia for both gasoil and jet fuel, contributing further to the liquidity.
Refining margins for July 10ppm sulphur gasoil closed the session at slightly above $15 a barrel.
Spot market discounts were little changed at 17 cents a barrel from the previous trading session, given the paper market’s contango shape and overall limited lower-priced sellers in the market.
Buying interest was slightly tepid in the open trading market ahead of mid-month.
Meanwhile, traders were waiting to see how jet fuel offers pan out from northeast Asian refiners to determine July supply balance, as discussions will likely start soon.
Demand drivers have been supportive so far, with both Vietnam and Indonesia out with their July requirements at least, and cargo flows to the U.S. West Coast ongoing for most parts of June, one refinery source said.
Flows to the U.S. West Coast, however, may be shaky if the arbitrage narrows in the near-term, a separate source said.
Regrade narrowed to a discount of 65 cents a barrel as a result.
SINGAPORE CASH DEALS
– No deals for both fuels
INVENTORIES
– U.S. crude oil stockpiles were expected to have fallen while product inventories likely rose last week, a preliminary Reuters poll showed on Monday.
NEWS
– Saudi crude oil exports to China will fall in July for a third straight month to about 36 million barrels amid plant maintenance and as some refiners opted for other sources of cheaper oil, several trade sources said on Tuesday.
– Oil prices traded lower on Tuesday as investors waited for key U.S. inflation data and the outcome of the Federal Reserve’s policy meeting to glean a clearer picture of where inflation is heading and how that will affect fuel demand.
– Global commodities trader Glencore has won a tender to supply crude oil to Prax’s 113,000-barrel per day Lindsey oil refinery in Britain, replacing rival trader Trafigura, three sources with knowledge of the deal told Reuters.
Source: Reuters (Reporting by Trixie Yap; Editing by Tasim Zahid)