Asia’s middle distillates firmed, supported by the positive sentiment in the West, though regional derivative market structures were little changed and spot cash discussions stayed rangebound.
The diesel front-month exchange of futures for swaps (EFS) (LGOAEFSMc1) rebounded and hovered near 1.5-year highs of $90 per ton, with some traders attributing it to possible shortcovering on the ICE gasoil front as Asian markets were little changed.
The likelihood of swing suppliers pivoting their cargoes west instead of east even for August will be high given the current east-west spreads, one trade source said, which could indirectly support Asian fundamentals in the near term.
So far, however, trade flows from Asia-Pacific to northwest Europe have yet to surface, some shipping sources said, though swing barrels are pivoting west for now.
Traders were still eyeing August spot sales from key northeast Asian refiners to gauge regional supply balances next month.
Refining margins (GO10SGCKMc1) regained some momentum and gained to slightly above $20 a barrel, supported by front-month paper markets.
On the trading window, spot markets were largely in a buy-sell gap though ready lower-priced sellers were available.
The 10ppm sulphur gasoil cash differentials (GO10-SIN-DIF) declined further, reflecting a lower-priced deal and also a weaker derivatives market structure.
Regrade (JETREG10SGMc1) declined to discounts of $1.70 a barrel for August, reflecting the slightly firmer gasoil markets in comparison with jet fuel.
SINGAPORE CASH DEALS
– One gasoil deal, no jet fuel deals
INVENTORIES
– Middle distillates inventories held at Fujairah Oil Industry Zone slipped by 416,000 barrels from last week to 2.306 million barrels for the week ended July 7, according to industry information service S&P Global Commodity Insights.
– U.S. crude stocks rose last week while distillate and gasoline inventories fell, market sources said, citing American Petroleum Institute figures on Tuesday.
NEWS
– Oil markets are absorbing OPEC+ production increases without building inventories, which means they are thirsty for more oil, United Arab Emirates’ Energy Minister Suhail al-Mazrouei said on Wednesday.
– Low water levels following a drought and heatwave in western Europe continue to hinder shipping through the Rhine river in Germany, commodity traders said on Wednesday, with rain in past days generating only a moderate rise in water levels.
– A mission was under way on Wednesday to rescue crew from the Eternity C cargo ship which sank in the Red Sea following an attack that killed at least four crew members.
Source: Reuters