Asia’s middle distillates markets eased from a week earlier on Friday with a regional supply deluge for July capping the upward price momentum, though some prompt demand and shortcovering buying activity remained supportive.
For 10ppm sulphur gasoil, end-July shipments were readily being offered by key northeast Asian oil majors, taking centre stage of the market for this week.
Deals were concluded at similar levels from before, between discounts of 50-90 cents per barrel.
South Korea’s spot sale volume for July is definitely more than June, multiple trade sources said, with some traders expecting South Korean oil majors to have sold at least 21 spot cargoes of mostly 300,000 barrels each. Half of which were probably done via private discussions .
Demand was mildly supported by some shortcovering buying activity in southeast Asia amid talks of refinery troubles and later-than-expected monsoon seasonal lull.
Jet fuel east-west arbitrage discussions to northwest Europe slowed as the price spreads between the two regions narrowed after mid-week.
The arbitrage spread between Asia and the U.S. west coast, however did widen enough to spur some spot discussions on the trade route, amid talks of unstable domestic supply in the latter region due to refinery production issues.
Refining margins closed the session at $19.3 a barrel, lower by 80 cents from a week earlier.
On the trading window, activity was minimal and cash differentials (GO10-SIN-DIF) barely moved as the paper market structure stayed firm.
Regrade widened slightly to discounts of more than $1.7 a barrel.
SINGAPORE CASH DEALS
– No deals for both fuels
INVENTORIES
– Gasoil stocks, which include diesel, that are independently held in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell on the week to their lowest since February 2024, data from Dutch consultancy Insights Global showed on Thursday, on a lack of imports and inland demand.
REFINERY NEWS
– A damaged unit of the South Pars refinery’s Phase 14, which was hit by Israel in its first strike on Iran’s oil and gas sector, has returned to operation, the Iranian state-run agency Nour News reported on Thursday.
NEWS
– Shipping costs for the Gulf have fallen in the past two days after a ceasefire between Israel and Iran, although rates could rebound if tensions increase, shipping and insurance industry sources said on Thursday.
– The U.S. will not complete scheduled deliveries of crude oil into the Strategic Petroleum Reserve until the end of the year due to maintenance, as much as seven months behind schedule, the Department of Energy said on Thursday.
– China’s factory activity likely shrank for a third straight month in June, a Reuters poll showed on Friday, as manufacturers await a more durable deal in a fragile trade truce with the U.S. to revive shipments to the world’s top consumer market.
– Oil prices headed for their steepest weekly decline since March 2023 on Friday, as the absence of significant supply disruption from the Iran-Israel conflict saw any risk premium evaporate.
Source: Reuters