Asia’s middle distillates markets continued to record a bout of thin spot activity on the trading window, with no physical deals for a second straight session, though some refiner sales for February carried on and spot discussion levels turned volatile.
China’s diesel exports for February were currently estimated at 400,000-500,000 metric tons, slightly higher from last month given the strength in export margins.
Worries about local inventories being insufficient may curb near-term exports from growing, two China-based trade sources said.
Meanwhile, volumes of 10ppm sulphur gasoil from South Korea are likely to be limited for both January and February as refiners mull run cuts ahead of some planned maintenance for some sites.
So far, major South Korean refiners have sold at least 7-8 cargoes of spot 10ppm sulphur gasoil for February, compared with around 11-12 cargoes last month.
The gasoil exchange of futures for swaps (EFS) spread narrowed into a smaller discount, given the slightly stronger market fundamentals in Asia compared with northwest Europe.
Refining margins were little changed at around $16.2 a barrel.
Meanwhile, spot cash differentials extended losses for the second straight session to $1.12 a barrel, against a backdrop of a narrowing paper market backwardation.
Regrade narrowed back to around $1.65 a barrel discounts, reflecting the weaker paper swap performance for gasoil in comparison with jet fuel.
Cash premiums for jet fuel meanwhile surged to slightly more than a two-month high of 76 cents a barrel, as firmer buying interest resurfaced on the trading window despite overall limited deals.
SINGAPORE CASH DEALS
– No deals for both fuels
REFINERY NEWS
– CVR Energy CVI said on Tuesday a fire which broke out in the naphtha hydrotreater unit at its Coffeyville, Kansas, refinery has been extinguished.
INVENTORIES
– U.S. crude oil and distillate stockpiles are expected to have fallen last week while gasoline inventories have likely risen, a preliminary Reuters poll showed on Tuesday.
– Middle distillates stockpiles held at Fujiarah Industry Oil Zone slipped to 2.522 million barrels for the week ended Jan. 20, according to industry information service S&P Global Commodity Insights.
NEWS
– Prices of Canadian and U.S. West Texas Intermediate crude oil to Asia jumped after shipping costs rallied on concerns that wider U.S. sanctions on the Russian fleet are tightening ship availability, trade sources said on Tuesday.
– Warren Buffett’s Pilot Co is shuttering its international oil trading business, ending an excursion into the trillion-dollar global market to refocus on its Pilot Flying J service stations and truck stops in the U.S., three sources told Reuters on Tuesday.
– Sri Lanka’s foreign minister said on Wednesday that the South Asian island nation had signed an agreement with Chinese state energy giant Sinopec 600028 to fast-track a proposed $3.7 billion oil refinery in its southern port city of Hambantota.
Source: Reuters