Asia’s middle distillates markets were mixed as thin spot physical trading liquidity for gasoil persisted, despite a jet fuel physical deal emerging for the first time in two months and upbeat gasoil paper swaps discussions weighing on regrade discounts.
Paper swap prices recorded a surge in the morning, tracking gains from last Friday’s ICE gasoil futures after more Red Sea attacks.
Physical markets however were quieter than the previous trading session, given a lack of direction from fewer spot sale tenders as most refiners cleared their cargoes a week earlier, tempering overall market firmness.
However, at least one refiner sold off second-half February spot cargoes at discounts of around $3 a barrel – as freight costs continue to mount.
Freight rates, on the other hand, were also stable, both on regional and east-west routes, after last Friday’s gains, two shipbroking sources said.
Spot market premiums trended in line with the fluctuations in the market backwardation, with a buy-sell gap still hindering firm trades.
A lack of lower-priced sellers exacerbated the thin discussions further, with most buyers likewise unwilling to pay up for higher-priced cargoes with worries of volatile demand.
Regrade for February widened even further to nearly $4 a barrel – a fresh four-month high- as gasoil prices continue to outperform jet fuel, despite the presence of some supporting drivers for the latter.
The east-west arbitrage remained opened, from Asia to the U.S. West Coast and northwest Europe, which could encourage a continuous demand pull from these regions going into February.
Lower-priced sellers emerged in the physical markets for the first time in weeks, weighing on overall cash premiums in the open spot market – despite a steeper market backwardation.
SINGAPORE CASH DEALS
– No gasoil deal, one jet fuel deal.
REFINERY NEWS
– Shell SHEL.L is planning to shut a 208,000 barrel per day (bpd) crude distillation unit at its Pernis oil refinery in the Netherlands, taking half the capacity of Europe’s biggest plant offline, industry monitor IIR said in a note to clients that was seen by Reuters.
– TotalEnergies TTEF.N restored steam production on Friday at its 238,000-barrel-per-day (bpd) Port Arthur, Texas, refinery, which had been shut since a Jan. 16 power outage, said people familiar with plant operations.
NEWS
– A tanker called Breeze is being loaded with fuel at Novatek’s terminal at the Baltic Sea’s port of Ust-Luga, where the company’s fuel-producing complex was damaged earlier this month, according to industry sources and LSEG data.
– China’s manufacturing activity in January likely shrank for the fourth straight month though at a slower pace than in December, a Reuters poll showed, indicating the country’s sprawling sector was still struggling to regain momentum at the start of 2024.
Source: Reuters (Reporting by Trixie Yap; Editing by Shweta Agarwal)