Asia’s middle distillates refining margins posted declines for the first time in three weeks, while premiums continued to gain amid ongoing tight supply concerns and overall upbeat market expectations going into the first half of February.
A portion of the market should have digested the news of some cuts in supplies from at least two southeast Asian refiners since early week and this has caused the rally to ease on Friday, a trading source said.
Cash premiums for prompt February, however, remained supported for the fourth straight week, at a three-month high, because of the continuous backwardation in the swaps market and heavy trader-based bidding/buying activities.
This came despite the market snapping an earlier six-session gain.
Spot buying interest from some regional importers also remained prevalent as some did not buy term cargoes earlier.
Meanwhile, sellers were hesitant to sell at lower prices since nobody could be sure how long the regional unplanned outages would last.
This comes against a backdrop of wider east-west price differentials and ongoing production woes in the United States due to weather.
Refining margins slipped to slightly above $23 a barrel.
Spot activity for jet fuel markets remained upbeat for February cargoes as key refiners were still focusing their production on jet fuel instead of gasoil given the better cash premiums. Most deals were still done at premiums of $1 per barrel or so for February.
Jet fuel refining margins closed Friday’s trading session at 3.7x% lower week-on-week.
Regrade declined by 5 cents week-on-week to around a discount of $1.10 a barrel, reflecting the ample supplies in the market.
SINGAPORE CASH DEALS
– No deals for both fuels
INVENTORIES
– U.S. crude oil stockpiles fell more than expected last week on strong demand from refineries, while gasoline and distillate inventories rose to multi-year highs, the Energy Information Administration (EIA) said on Thursday.
– Oil product stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell by around 3.3% in the week to Thursday to 5.11 million metric tons, according to data from Dutch consultancy Insights Global.
Gasoil stocks drove the weekly decrease in inventories, falling more than 6% to 1.84 million tons.
REFINERY NEWS
– Exxon Mobil Corp XOM.N is overhauling a diesel-producing hydrocracker and a reformer at its 619,024 barrel-per-day (bpd) Beaumont, Texas refinery, people familiar with plant operations said on Thursday.
– TotalEnergies’ 238,000-barrel-per-day Port Arthur, Texas, refinery remained shut on Thursday following a plant-wide power outage on Tuesday, people familiar with plant operations said.
– Motiva resumed operations at its 626,000 barrel-per-day Port Arthur, Texas refinery to planned levels by Wednesday, people familiar with plant operations said on Thursday.
NEWS
– About 40% of North Dakota’s oil output remained shut-in due to extreme cold weather and operational challenges, the state’s pipeline authority said on Wednesday.
– Two oil tankers that had diverted away from the Red Sea have turned back and passed through the Bab al-Mandab Strait, ship-tracking data shows, though tensions in the region continued to disrupt global shipping and trade.
– Oil prices rose on Friday as geopolitical tensions and oil output disruptions in the U.S., the world’s biggest producer, caused by cold weather overshadowed concerns about slow Chinese demand growth and forecasts for ample supply.
Source: Reuters (Reporting by Trixie Yap; Editing by Sohini Goswami)